Marriott leaders hint at cost cuts that will almost certainly impact future hotel stays

05.11.2024 - 00:13 / thepointsguy.com / Leeny Oberg / Anthony Capuano

At a time when major hotel companies like Marriott and Hilton increasingly grow by appealing to owners of existing hotels to take on a new brand affiliation, the executives of these brands have to do what they can to sweeten the deal.

Monday morning, Marriott's executive team indicated they're about to roll out a major cost-cutting initiative to appeal to hotel owners and presumably make affiliation with Marriott International, the world's largest hotel company, even more appealing. The overall cost cuts could run as much as $90 million across the organization.

The chatter on the brand's earnings call could make some assume the savings and efficiencies initiative might target Marriott at the corporate level. If you think that doesn't impact you, guess again.

"We're looking at efficiencies and savings that we think will have clear benefits to the owners," Marriott CEO Anthony Capuano said during Monday's earnings call. "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."

While Capuano and Leeny Oberg, Marriott's chief financial officer and executive vice president of development, declined to provide much in the way of specifics while they presided over the investor call, it's easy to presume the company will continue to explore ways to do more with less at the property level.

Much of the industry has moved away from full-service restaurants or even heavily staffed breakfast bars at select-service hotels in favor of grab-and-go markets in the lobby. It's logical to think further adjustments around food and beverage offerings might be in the works, as hotel restaurants often operate at a financial loss.

There could also be smaller adjustments around what are mandatory brand standards. The Marriott leadership team several years ago even hinted alarm clocks on guest room nightstands might not be as useful these days since so many people bring their own smartphones.

While we'll wait to hear Marriott leadership's official cost-cutting details, one can't help but think this could also help Marriott woo owners at a time when its competitors are grappling with similar conversations.

Hyatt's leadership team late last month noted that they had lost some hotels to competitors because owners felt it was too expensive to maintain brand standards. Meanwhile, Hilton's new Spark brand is rapidly growing thanks to hotel owners who find it easier and more affordable to convert to that brand's requirements rather than stay in their existing brand network.

But speaking of Spark, Marriott's plan to introduce the Mexico-based City Express brand it acquired last year into the U.S. is a sign the hotel giant increasingly