Coronavirus pandemic prompts Marriott Vacations to cut 3,300 employees
COVID-19 had 'adversely impacted demand for the company’s products and services'
The hotel industry is struggling amid COVID-19 concerns. FOX Business' Gerri Willis with more.
Timeshare giant Marriott Vacations Worldwide is planning to cut thousands of employees as early as November as the coronavirus pandemic continues to exacerbate troubles for the already reeling travel industry.
The company's "workforce reduction plan," which was approved earlier this month, will impact roughly 3,300 associates, according to a regulatory filing. However, the company projects the cuts won't take effect until at least mid-November.
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| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| VAC | MARRIOTT VACATIONS WORLDWIDE CORP. | 90.22 | -1.05 | -1.15% |
The plan was implemented after Mariott Vacations said virus-related government restrictions on travel and business "adversely impacted demand for the company’s products and services," which put a strain on the company's financial position.
In its latest bid to weather the pandemic, the company hopes the cuts will help "re-balance its workforce to better align with the evolving needs of the business," the filing said.
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The company bills itself as a global industry leader in vacation ownership that offers vacation ownership, exchange, rental and resort and property management, along with related businesses, products and services. Its portfolio includes seven vacation ownership brands.
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Few sectors of the economy have endured as much devastation from the coronavirus as the travel business. Surveying the wreckage, economists and company leaders say it will take years to regenerate the $1.1 trillion the industry produced last year, potentially leaving many airlines, hotels, rental car companies and restaurants in peril.
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Marriott Vacations estimates it will incur roughly $25 million to $30 million in "restructuring and related charges," which will primarily be related to employee severance and benefit costs.
The majority of these costs are expected to be incurred within the remainder of fiscal year 2020. The $25 million to $30 million of restructuring and related charges are expected to result in future cash expenditures, the company said.
The Associated Press contributed to this report.