Choice to cut furloughed U.S. employees

Loss of consumer demand because of the COVID-19 pandemic led to decision

Choice Hotels International laid off U.S. employees who had previously been furloughed to cut losses from the COVID-19 pandemic. The laid off employees will receive severance packages and benefits, including outplacement support. The number of employees was not made clear by the company.

LOSS OF REVENUE from reduced consumer demand resulting from the COVID-19 pandemic has led Choice Hotels International to lay off U.S. corporate employees who had previously been furloughed. The decision is the most recent of similar steps large companies have had to take to deal with the crisis.

The laid off employees will receive severance packages and benefits, including outplacement support. The number of employees was not made clear by the company, but it has reduced its global workforce by more than 20 percent through a combination of layoffs and furloughs since the beginning of the first quarter, including the most recent layoffs.

A hiring freeze remains in place for all non-critical positions globally.

Choice Hotels made the difficult decision to transition previously furloughed corporate roles in the U.S. to a reduction in workforce, effective July 1, as part of the ongoing evolution of its efforts to help ensure the long-term health of the business and its independently owned and operated hotels amid a significantly reduced consumer demand environment resulting from the COVID-19 pandemic,” Choice said in a statement.

In early April, Choice announced several other steps to compensate for losses stemming from the COVID-19 downturn. They include:

  • Reduced the compensation for the company’s board of directors, chief executive officer and other executive officers for the remainder of 2020.
  • Implemented a hiring freeze except with respect to certain critical positions, suspended associates’ 401(k) match and implemented a temporary furlough for certain positions in Europe, where government-mandated and other closures have been more prevalent.
  • Eliminated, reduced or deferred non-essential expenditures, discretionary capital expenditures and investments.
  • Suspended the company’s share repurchase plan.
  • Determined to suspend future, undeclared dividends for the remainder of 2020.

“Given the broad-based uncertainty of the current environment, we have taken decisive actions over the past several weeks to position the company for changing market dynamics and enhanced our financial flexibility to sustain the long-term health of the business,” Patrick Pacious, Choice president and CEO, said at the time. “We are confident in our ability to weather this storm, while supporting our franchisees as they navigate uncharted waters. Choice Hotels has been through challenging times before and, each time, the company has always emerged stronger given its long-term focus, proven brands, high-caliber associates and broad franchisee base.”

Other large companies have had to make cuts to their workforces as well. In June, Hilton Worldwide Holdings announced it was cutting around 2,100 corporate positions. India-based OYO hotels and Homes laid off and furloughed “a certain number of employees” in the U.S. Also, Vision Hospitality Group, led by President and CEO Mitch Patel in Chattanooga, Tennessee, had to furlough 1,100 of his 1,500 employees.

The “COVID-19 Hotelier Sentiment Study” by Fuel, StayNTouch and ReviewPro said that, while 41 percent of respondents believe that their hotels will fully recover in less than a year, most were “engaging in broad budgetary cuts” that included layoffs and furloughs.