Marriott moves portend future job cuts – a pandemic legacy?

(Contactless Arrival Kiosks at Moxy NYC Times Square – photo by Marriott International)

Before his death, former Marriott CEO Arne Sorenson wondered at the beginning of the pandemic if job cuts would hinder the hotel industry’s ability to recover. But now that the end of the pandemic is within sight in the U.S., it looks like Marriott is taking steps to make job cuts permanent. Is this actually what customers want, or a cynical maneuver to reduce the labor force?

On April 5, Marriott CFO Leeny Oberg told the Wall Street Journal that the company was committed to controlling costs: “We are always looking for ways to save money.” The article noted that one method Marriott was looking to use was “a new labor-management system used in some of the hotels Marriott manages itself in the U.S. The system helps to better predict staffing levels depending on the level of bookings and will be rolled out further in the coming months.” Marriott’s annual report revealed that the company employed 53,000 fewer workers at year-end 2020, compared to 174,000 employees at the end of 2019.

The same day, Marriott International put out a press release touting two pilot programs at some hotels that would bolster the company’s ‘Commitment to Clean’ initiative – contactless arrival kiosks to allow guests to check in and out without a front desk agent; and wall-to-wall kiosks where guests can self-checkout food and drinks. While touted as a response to the pandemic, if retained in the future these changes will likely reduce hotel employment.

Marriott is debuting these moves in an environment where, despite difficult headwinds, hotels remain a viable business model. In a March article Skift noted that even in a year where much business and leisure travel ground to a halt, 45% of US hotels were profitable in 2020. Hospitality data company STR noted that the financial breakeven point for full-service hotels fell from 47% occupancy to 30% occupancy in 2020. In other words, in a year where hotels hotel occupancy dropped precipitously, the bar for hotel owners to make profits was lowered significantly – in part by cutting back labor-intensive amenities like bars, restaurants, room service.

New Marriott CEO Anthony Capuano seemed to acknowledge that these technological changes would change hotel jobs, in non-specific ways:

MARGARET BRENNAN: You know, when we look at the jobless rate in the country your industry is so frequently turned- pointed to as one of the biggest places of losses, particularly for women. I’m wondering of all the adaptations that you have had to make in your hotels for safety reasons and protocols with, you know, not checking in in person, but doing it on your phone or doing it digitally, haven’t you managed your way towards just needing to employ fewer people? I mean, are these jobs actually coming back?

CAPUANO: In markets where demand is recovering, we’re absolutely seeing those jobs come back and in many of the markets you described were actively hiring. I think what those technological advances allow us to do is really engage our employees more in interacting with the guests and meeting their needs.

At least one travel blogger expressed dismay at Marriott’s initiatives. One Mile at a Time complained that the implementation of the devices was “about cutting staffing, not customer experience.”

The reality is that these job cuts are not inevitable – they are a conscious decision by Marriott about the future of hotel work. Marriott justifies these moves with references to survey data about customer preferences that, critically, do not specify whether customers want to see changes only in the context of the pandemic or continuing afterwards.[i] This raises the question of whether Marriott intends these new technologies as pandemic-era solutions, or as more long-lasting changes.

[i] Marriott’s press release states, “According to a recent report published by The Travel Technology Association, 65 percent of travelers say that accommodations will need to use the latest technologies to make them feel safe.” This is ultimately derived from a survey, which asked about the statement, “Accommodations will need to use the latest technologies to make travelers feel safe.” The press release also states, “In another report from Medallia Zingle, 87 percent of U.S. customers said they would like to see companies continue to offer options that limit in-person service.” The survey asked, “Do you think brands should continue to offer options for things like curbside pickup that limit the need for in-person visits?”