Skift Take
If you double your hotel empire over a decade, someone’s eventually going to ask: “Hey, are we running this thing efficiently?” At Marriott, that someone is CEO Anthony Capuano.
Marriott International unveiled plans Monday for its biggest organizational overhaul in a decade, targeting up to $90 million in annual cost savings as the hotel giant repositions itself after doubling in size over the past decade.
The world’s largest hotel company will implement cuts of between $80 and $90 million a year, starting in 2025.
The effort is part of what Anthony Capuano, president and CEO, called an “enterprise-wide process to enhance effectiveness and efficiency.” The restructuring aims to help owners and franchisees “operate even more nimbly.”
During an earnings call, the Bethesda, Maryland-based company said it’s targeting about $100 million in restructuring charges in the fourth quarter of 2024.
“The company is quite different than the last time we looked holistically at the organization,” Capuano said. “We’ve more than doubled in size over the last decade.”
“With meaningful growth opportunities around the world across our more than 30 brands, we’re confident these efforts will make us even more competitive,” CFO Kathleen Oberg said.
Update on Newest Hotel Brand
With its newly branded City Express by Marriott chain, Marriott reported progress on its calculated move into the midscale hotel segment in North America. The company reported “extensive interest” from owners in this brand, with the first locations opening “within months.”
“Our progress in the midscale space around the world has been outstanding,” Capuano said.
Marriott’s interest comes as multiple hotel groups seek to capture a greater share of this high-growth market segment, fueled by rising demand from middle-class travelers.
Loyalty Program Growth
- The company’s Marriott Bonvoy loyalty program hit a new milestone, reaching 219 million members. In an industry where direct bookings mean higher margins, that’s valuable currency, executives said.
- “Thanks to our recent tie-up with Starbucks, even members with only one hotel stay can now redeem points for a cup of coffee,” Capuano said.
- The company also launched co-branded credit card services in 11 countries in Central and Latin America.
Expanding Marriott’s Footprint Globally
- In the third quarter, Marriott’s development pipeline reached a record high of roughly 585,000 rooms.
- The hotel operator is maintaining strong momentum in conversions, which represented over 30% of room additions and over half of new signings. Conversions gained on new builds as part of the mix because of ongoing headwinds in financing and building new construction.
- The company added 16,000 net rooms, pushing the global room count to roughly 1.67 million. It forecasted room growth at around 6.5% for 2024, at the high end of previous guidance.
- Looking ahead, a notable deal with Sandman Group will add 9,000 existing rooms and several thousand more in development.
Third Quarter Highlights
- Despite solid growth metrics, Marriott’s reported net income fell to $584 million from $752 million in the year-ago quarter, partly due to higher interest expenses and increased one-time administrative costs.
- It generated $1.54 billion in revenue (after subtracting money it collected and returned to hotel owners and managers).
- Group bookings â corporate conferences and events â were a bright spot. Revenue per available room was up 10% for that segment. Group revenues for 2025 bookings are pacing up 7% year-over-year.
- While Marriott’s group and business travel segments showed strength, leisure travel revenue per available room was flat year-over-year.
- “Third quarter international [revenue per available room] rose 5.4%, led by meaningful gains in APEC and EMEA, with resilient domestic and cross-border demand,” Capuano said.
- In China, Marriott outperformed competitors, but Marriott faces what CFO Oberg called “continued weakness in revenue per available room.” Translation: Chinese travelers aren’t spending like they used to. Yet Oberg noted a “slight pickup in cross-border travel into the Tier 1 cities.”
Accommodations Sector Stock Index Performance Year-to-Date
What am I looking at? The performance of hotels and short-term rental sector stocks within the ST200. The index includes companies publicly traded across global markets, including international and regional hotel brands, hotel REITs, hotel management companies, alternative accommodations, and timeshares.
The Skift Travel 200 (ST200)Â combines the financial performance of nearly 200 travel companies worth more than a trillion dollars into a single number. See more hotels and short-term rental financial sector performance.
Read the full methodology behind the Skift Travel 200.
