US-based travel firms, like Marriott International are slashing their budgets and cutting down their workforce ahead of next year. The travel companies are trying to navigate the decreasing demand for leisure travel from lower-income customers as it impacts top-line growth.
Real estate analytics firm, CoStar and global travel data firm, Tourism Economics, in November revised their outlook for 2025 for room revenue growth and downgraded it from 2.6 per cent to 1.8 per cent, reported Reuters.
The shrinking demand for budget hotels cut down growth in the hotel business in 2024 and this trend is expected to persist in 2025. Aran Ryan, director of industry studies, Tourism Economics, a subsidiary of Oxford Economics, said, “We anticipate these recent trends to moderate and for overall demand growth to be slightly stronger next year.”
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The executive said that higher-income travellers still have strong intent to continue travelling. These reductions are taking place across the leisure industry, ranging from hotels to resorts to travel bookers. Hotel operator Marriott in the month informed investors that it will slash its annual pre-tax and administrative costs by $80 million to $90 million, and later it noted that it would let go of over 800 employees at the corporate level in the first quarter.
“Marriott is going to implement layoffs early next year as the result of a poor earnings turnout. This sounds like a move towards running a leaner and more efficient Marriott,” Sylvia Jablonski, Chief Investment Officer, Defiance ETFs noted.
Meanwhile, Booking.com, a brand of Booking Holdings said that it would slash jobs after slowing down its hiring in the last year. In the third quarter, the company’s workforce rose 3 per cent on a year-on-year (YoY) basis in comparison to a 13 per cent surge seen in the preceding year.
