Dive Brief:
- While pay and benefit inflation headwinds persist, wage pressures and hiring challenges have moderated, Marriott International CFO Leeny Oberg said on the company’s earnings call Tuesday.
- The Bethesda, Maryland-based hotel operator is one of many lodging companies who have struggled to staff hotels as pandemic restrictions eased and travel spiked. Nearly all hotels (97%) experienced staffing shortages while half reported being severely understaffed with housekeeping being the most critical staffing need, according to a June survey from the American Hotel & Lodging Association.
- “Hiring challenges have moderated and the number of open positions in the U.S. is now below 2019 levels,” Oberg said, according to a transcript of the call, noting that guest surveys indicate that customer satisfaction is continuing to rise.
Dive Insight:
Wages are top of mind for many CFOs who are faced with the challenge of keeping costs in check ahead of a possible recession while also retaining talent in a still strong labor market.
The Fed last week raised the federal funds rate by a quarter percentage point to a range of 4.5% to 4.75%, slowing monetary tightening amid signs of a cooling economy, CFO Dive previously reported. But the Labor Department also reported that unemployment last month fell to 3.4%, the lowest level since 1969.
“The wage pressures have moderated,” Oberg said on the Tuesday call in response to questions. “And we are seeing a more normalized environment, both at the property level as well as above property.”
Marriott is not the only lodging company to signal a potential brightening in the labor outlook this earnings season. Last week Hilton Worldwide CEO Chris Nassetta said that the labor market situation has “eased a lot.”
“We are not fully back to where we were in terms of access to labor, but we’re getting awfully close,” Nassetta said according to a transcript of the hotel operator’s Feb. 9 call.
Separately, during Marriott’s call one analyst asked whether housekeeping — an amenity that has been curtailed at some hotels due to labor constraints — would be coming back. Marriott CEO Anthony Capuano said that depended on the type of hotel.
“In our luxury portfolio, we are essentially back to pre-pandemic full daily housekeeping,” Capuano said. “In the upper upscale tier, we have daily tidy, so not a full cleaning, but making the bed…cleaning the trash, etcetera. And in our select service..we have every other day tidy.”
Marriott reported strong fourth quarter results, with comparable system-wide constant dollar revenue per available room rising 28.8% worldwide compared to the year-earlier quarter.
“Just two years after experiencing the sharpest downturn in our company's history, we reported record financial results. Our fee-driven, asset-light business model generated significant cash during the year, allowing us to both invest in the growth of our business and return $2.9 billion to shareholders,” Capuano said in a statement.
The company is also on track to acquire Hoteles City Express, a portfolio of about 152 hotels in Mexico and Latin America that the company previously said marked its entry into what it called the “affordable midscale” hotel segment.
