- Declining demand for budget hotels prompts US-based travel companies, including Marriott and Booking.com, to prepare for major layoffs in 2025.
- The industry is set to increase reliance on automation and efficiency measures to lower costs as higher-income consumers continue to support travel demand.
As reported by Reuters, the US travel industry is bracing for a challenging 2025 as falling demand from lower-income leisure travelers prompts major companies to implement workforce reductions. The organizations intending to downsize are hotel giant Marriott International, online agency Booking.com, and ski resort operator Vail Resorts.
Analysts indicate that decreased demand for budget hotels has stunted growth in the hotel business in 2024. This trend is anticipated to persist in 2025. As such, real estate analytics company CoStar and global travel data firm Tourism Economics have adjusted their 2025 outlook for room revenue growth downward, from 2.6% to 1.8%.
Despite the current economic climate, Aran Ryan, director of industry studies at Tourism Economics, expects overall demand growth to pick up slightly next year. He attributes this optimism to the continued strong travel intentions of higher-income consumers.
Marriott International has announced plans to cut its annual pre-tax and administrative costs by $80 million to $90 million, resulting in over 800 corporate-level layoffs in the first quarter. Meanwhile, Booking.com has signaled potential job cuts following a slowdown in its headcount growth last year. Vail Resorts also plans to implement a 14% reduction of its corporate workforce to achieve $100 million in annualized cost savings by the end of 2026.
Industry leaders are increasingly looking to automation as a cost-saving measure. Norwegian Cruise Line Holdings, for instance, anticipates $300 million of savings through 2026 by consolidating back-office activity using low-cost technology. Similarly, timeshare company Marriott Vacations Worldwide plans to save $50 to $100 million annually over the next two years, partially through automation efforts.
These measures reflect a broader trend within the travel industry of streamlining operations and optimizing efficiency amid economic uncertainties. As companies navigate these challenges, the focus is on maintaining service quality while adjusting to shifting market demands.