US-based hospitality giant Hilton Worldwide Holdings Inc is planning to lay off up to 2,100 employees, or around 22 percent of its corporate workforce. The company stated that the continued travel demand slump and the economic disruptions caused by the coronavirus pandemic has greatly battered its business prospects, forcing it to take more drastic measures to drive down costs.
Apart from laying off its existing employees, Hilton also announced plans of extending the furlough period of affected workers for an additional 90 days. This will include all affected workers that were furloughed since late March, around the same time the company had revealed plans of making drastic executive pay cuts to secure its liquidity.
In a press release published this week, Hilton's chief executive officer, Christopher Nassetta, mentioned that he was very much devastated by the decision. However, he reasoned that the never in the company's more-than-a-century old history has it faced such a massive global crisis that effectively brought travel to a standstill. Nassetta claimed that the pandemic had negatively affected the company's finances more than the 911 attacks and the 2008 financial crisis combined.
Since the number of positive coronavirus cases had exponentially increased earlier in the year, the global travel industry was brought down to its knees as governments imposed strict travel bans and shelter-in-place orders. The collapse of the travel industry resulted in a cascading effect that also negatively affected other types of businesses. Hotels were forced to temporarily close due to travel restrictions and the lack of demand, with some implementing more drastic measures to ensure their survival.
Hilton's rivals, such as Hyatt and Marriot, have all started to find ways to reduce their expenses, resulting in thousands of workers being furloughed or let go. Marriot, the world's largest hotel chain operator, had announced in March that it would have to let go of some of its employees. Hyatt swiftly followed suit and announced last month that it would have to let go of up to 1,300 employees due to the economic downturn.
Industry experts have agreed that the path to recovery will be long and slow. Companies that were not quick to respond to the crisis will likely go under, while those that were able to quickly secure their liquidity will survive. In the US, the hotel industry is estimated to have lost around $30 billion in revenue since the start of the year. According to the American Hotel and Lodging Association, 6 out of every 10 hotel rooms in the US still remain empty.
