22% of Hilton’s Corporate Workforce Laid Off

As COVID-19 continues to depress revenues in the hospitality industry, hotels have been forced to make tough decisions. Yesterday, Hilton Worldwide Holdings announced that it is laying off 22 percent of its corporate workforce, the equivalent of 2,100 employees. The company also announced a 90-day extension of existing furloughs of corporate staff originally sent home in March.

Additionally, over the next 90 days Hilton executives will continue to take a 50 percent pay cut, and CEO Christopher Nassetta will forgo his salary for the remainder of 2020.

According to Forbes, the laid-off Hilton workers will receive severance pay and “access to an expedited recruitment process when travel resumes.”

In a press release announcing the decision, Nassetta said he was “devastated that to protect our business, we have been forced to take actions that directly impact our Team Members,” especially because “hospitality will always be a business of people serving people.” Nassetta noted that “never in Hilton’s 101-year history has our industry faced a global crisis that brings travel to a virtual standstill.”

Such staff reductions are not unique to Hilton. In March, Marriott International cut its corporate staff by about two-thirds. Tens of thousands of Marriott employees were affected, with the furlough period set to last until October. Furloughed staff at Marriott are still getting health-care benefits, and corporate employees are being paid 20 percent of their salaries.

More: Marriott, MGM, Hilton to Furlough Tens of Thousands of Employees

The effects of COVID-19 on hotels have been nothing short of devastating. In March, Marriott stated that “the COVID-19 pandemic is having a more severe and sustained financial impact on Marriott’s business than 9/11 and the 2008 financial crisis, combined.” Forbes cited data from American Lodging and Hotels Association that hotels in the U.S. have lost $33 billion in room revenue since mid-February.

Although many states across the U.S. have begun to reopen their economies and travel is picking back up, the decision made by Hilton yesterday underscores that many businesses in the hospitality industry are not out of the woods yet.