While details are limited as of now, Marriott is planning some cost cutting… and that can’t be good for hotel guests (thanks to View from the Wing for flagging this).
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Marriott plans corporate & hotel cost cutting
Marriott has announced its Q3 2024 results, and the company missed its profit estimates, and lowered its earnings guidance. But worry not, the company has a plan to improve that!
Marriott CEO Anthony Capuano announced plans to enhance effectiveness and efficiency across the company, which is expected to result in savings of $80-90 million, starting in 2025. As Capuano explains, “it felt like the right time to look across the enterprise and figure out what adjustments we can make to enhance and improve our efficiency.”
The claim is that much of the cost cutting will be focused on general and administrative expenses, but there aren’t any details of what that entails. We have reason to believe there’s more to this, though — the company also plans to deliver cost savings to hotel owners and franchisees. For hotel guests, this is the most concerning part:
“We’re looking at efficiencies and savings that we think will have clear benefits to the owners. We’re looking at every facet of our engagement with them, and we expect to have some tangible saving opportunities identified for them in the very near future.”
I’m curious to see what changes come from this
There’s often misunderstanding among consumers about the economics of the hotel industry for the mega hotel groups. The major hotel groups don’t own a vast majority of their properties, but rather just have management or franchise contracts for them. They get a cut of the revenue generated. In reality, Marriott’s “customers” are the hotel owners and investors, and guests are just the product that they can sell to them.
So it’s important to frame any cost cutting in that context:
- Marriott centrally plans to cut $80-90 million in costs, which wouldn’t be on the hotel level
- At the same time, Marriott is looking to deliver savings to its hotel owners, which is separate from that $80-90 million in savings (since those savings are for Marriott corporate, and not the individual hotels)
Simultaneously cutting costs centrally while also providing opportunities for hotels to cut costs isn’t a good combination. Presumably it’ll have to come at the expense of us guests, at least in some way. Could we see changes to Marriott Bonvoy, cuts to service and amenities, or lowering of brand standards?
Marriott’s CEO has long made it clear that he believes Bonvoy doesn’t need to be the best program, because the company can make up for any shortcomings there with the breadth of its portfolio. And he’s not totally wrong, because Marriott’s footprint is so large that it can sometimes be tough to book away.
Bottom line
While details are limited as of now, Marriott’s CEO is promoting how the company will cut $80-90 million in costs in 2025. Not only that, but the hotel group is also looking for “efficiencies” that give clear benefits to hotel owners, to provide additional savings opportunities.
We’ll have to stay tuned, but it sounds like us Marriott Bonvoy members should expect less rather than more from the company in 2025 and beyond.
What do you make of these vague Marriott cost cutting comments?
The is some part of this which does not seem possible. Sure some hotels are losing money yet hotels in big cities are charging the highest prices ever AND they appear to be full very often. Why penalize the guest experience at hotels charging close to $1k per night?
These are corporate cost reductions - layoffs.
As you say, we don't know. But cutting free breakfast or eliminating or reducing Lounges would be a biggie. Marriott has been cutting lounges for a while now. If these get cut - some people will start booking for most convenient hotel and avoid staying mostly at Marriott.
Perhaps they really are too big to care, but perhaps those losses are because customers are noticing the decline in quality and benefits, and are booking elsewhere. I know I am. I was ambassador two years ago, actively looking to stay at Marriott brands and reach the top Bonvoy threshold. This year, a quick tally says I will have 95 nights in hotels, almost all of them in luxury international properties, and only nine of...
Perhaps they really are too big to care, but perhaps those losses are because customers are noticing the decline in quality and benefits, and are booking elsewhere. I know I am. I was ambassador two years ago, actively looking to stay at Marriott brands and reach the top Bonvoy threshold. This year, a quick tally says I will have 95 nights in hotels, almost all of them in luxury international properties, and only nine of them at Marriotts.
If there are others out there like me, Marriott’s powers-that-be might consider whether cost- and benefit-cutting really is the road back to profitability, or whether a more guest-centric approach — in which, among other things, we get the benefits we are promised — would be more lucrative for them and their hotel owners.
We do a good bit of international travel. As a result of recent stays, with shortcomings and major problems too numerous to list here, we WILL NOT stay in Le Meridian or Delta hotels. We would consider Ritz-Carlton but that's about it.
Here’s yet another reason to avoid Marriott. I used to be a die-hard Marriott fan; as an international traveler, I’d go out of my way just to stay at their properties. Not anymore. Now I have top-tier status with about eight different hotel loyalty programs, and Marriott is consistently my last pick. They’ve completely let their loyalty experience fall apart, and it’s obvious they’ve stopped caring about their technology. Just open the Marriott app and...
Here’s yet another reason to avoid Marriott. I used to be a die-hard Marriott fan; as an international traveler, I’d go out of my way just to stay at their properties. Not anymore. Now I have top-tier status with about eight different hotel loyalty programs, and Marriott is consistently my last pick. They’ve completely let their loyalty experience fall apart, and it’s obvious they’ve stopped caring about their technology. Just open the Marriott app and compare it to Hilton’s—it’s like night and day. Even their so-called “luxury” brands, like The Ritz-Carlton and St. Regis, have lost their charm and become watered-down, industrial versions of what they used to be.
What blows my mind is that Marriott seems oblivious to the fact that customers have options. It’s like they’ve decided they’re “too big to care.” Customers have much easier access to way better loyalty programs now, and Marriott’s slowly dropping down everyone’s list. I don’t know who’s making the decisions over there, but it’s clear they’ve lost touch with what their customers actually want.
Ironic that the technology and loyalty program are so bad, given that Marriott is nothing but a booking platform and loyalty program these days. They've given up on hotelkeeping and hospitality. Those management fees that Marriott collects from hotel owners are not so much for providing hospitality to guests as royalties paid to use Marriott brands (the number of which has surely increased again since I started typing this message).
You have top tier at eight hotel chains, seven of them are preferred above Marriott?
I'd really like to know what are the seven. Hard to believe you prefer Wyndham or Best Western over Marriott. Or you're a Ambassador, Globalist, and 3 different Diamond. To have top-tier at eight brands you'd probably have to stay two properties per night.
I’m top (ambassador) at Marriott, diamond at IHG, Diamond at Hilton, and Globalist at Hyatt. In my opinion, I’d rank them as the following
- Hyatt
- IHG
- Hilton
- Marriott
If you factor in SLH, I’d move Hilton right below but very close second to Hyatt with the number of wonderful properties and how they treat diamonds. My wife actually dreads staying at marriotts compared to the other brands....
I’m top (ambassador) at Marriott, diamond at IHG, Diamond at Hilton, and Globalist at Hyatt. In my opinion, I’d rank them as the following
- Hyatt
- IHG
- Hilton
- Marriott
If you factor in SLH, I’d move Hilton right below but very close second to Hyatt with the number of wonderful properties and how they treat diamonds. My wife actually dreads staying at marriotts compared to the other brands. We typically redeem at higher end brands, so with Marriott no free parking, no breakfast, no upgrades, really a whole lot of nothing. But maybe a bottle of water? It’s a joke. For anyone to argue otherwise with similar travel experience would be surprising. I’d
Honestly pick Accor silver over Marriott ambassador. Then you at least get a welcome drink!
@AK
That is really impressive. Top-tiered status at eight different hotel chains? Can you share with us any advice you may have on how to achieve it?
Is it holding the right credit card to spending a lot on the credit card for the elite nights?
Status matching or lifetime status? I can see that if you already have lifetime status with chains like Hilton or Hyatt you can focus on the others. Though, with...
@AK
That is really impressive. Top-tiered status at eight different hotel chains? Can you share with us any advice you may have on how to achieve it?
Is it holding the right credit card to spending a lot on the credit card for the elite nights?
Status matching or lifetime status? I can see that if you already have lifetime status with chains like Hilton or Hyatt you can focus on the others. Though, with Accor you can earn their top tier status by spending 10,400 euros every year.
I am very curious as to your approach and hope can learn something here.