Marriott Vacations Worldwide announced to close all of its North America sales centers for two weeks effective March 23, 2020
The company is also closing its resorts for rental guests with stays at branded North America vacation ownership resorts for the next 30 days. Moreover, it is reducing operations and amenities at all resorts based on various governmental mandates and advisories.
Stephen P. Weisz, president, and the chief executive officer said:
“From Singapore to London to Hawaii, the effect on our business is both widespread and profound. We have a resilient business model with nearly half of our Adjusted EBITDA Contribution coming from recurring revenue streams. While we’ve never seen anything of this magnitude, we have seen other disruptions in the past and we’ve been able to manage through them.”
As previously announced, the Company started the year off strong, with first-quarter consolidated contract sales up 10% through March 13th. In addition, North America resort occupancy was above 80% for the week ended March 16th. Since then, the Company has seen marked declines in occupancy, rentals, and contract sales due to the COVID-19 pandemic.
As a result, the Company is taking a number of mitigating actions, including:
- The Company’s executive leadership team is taking a 50% salary reduction.
- All new hires, with the exception of mission-critical needs, have been frozen.
- The Company is implementing furloughs and reduced work hours.
- It is deferring its employee 401(k) match.
- Also, the Company has developed plans that could reduce investment in capital expenditures and inventory by up to $240 million if necessary.
- It has suspended share repurchases under its share repurchase plan.
Mr. Weisz. said:
“We expect that we can make the changes needed so that we can run the business at close to cash flow neutral until the business returns to a more normal level. Thanks to the resilience of our business model and the extremely difficult decisions we are making, I firmly believe that we will come through this an even stronger company.”