Huge Layoffs Coming To Starwood Corporate Next Month

Marriott’s takeover of Starwood closed on September 23, and so far I’d say they’ve been doing a good job. Marriott Rewards and Starwood Preferred Guest introduced reciprocal status matching and allowed points transfers from day one, which we’ve never before seen so quickly following a merger being finalized.

Merger

However, Marriott is taking their time integrating the brands, and plans on running independent loyalty programs though at least the end of 2017. So those of us who are SPG loyalists can continue to enjoy the program for at least another year.

Unfortunately it’s inevitable that there will eventually be big job cuts at Starwood. When the takeover was first announced, Marriott said that they hoped to achieve $250 million in corporate overhead savings, and one way to make progress towards that goal is by eliminating redundant positions at the two groups.

Well, unfortunately it looks like some of those job cuts at Starwood will come sooner rather than later, well before the Starwood brand disappears. This past Friday Marriott informed the Department of Labor that they’ll be laying off “approximately 163 employees” by the close of business on December 31 in Stamford, Connecticut, which is the headquarters for Starwood.

Per the Hartford Courant:

The layoffs include some rank and file workers, such as administrative assistants, executive assistants and specialists in supply chain, design and brand management. But most of the layoffs are for managers, directors, vice presidents and senior vice presidents.

“They’re all senior management,” said Thomas Madden, Stamford’s economic development director.

Starwood’s letter to the state said that the employees have been informed that Marriott, which is based outside of Washington, D.C., will be posting jobs “in the coming weeks for which they may apply.”

As of now about 660 Starwood employees work in Stamford, so this represents layoffs for about 25% of their corporate employees there.

Starwood received some nice corporate incentives for having their headquarters in Stamford, and it looks like that will cause Marriott to keep that office open with at least 400 employees through 2018, or else it will cost them dearly:

Under the agreement with the state, if Marriott reduces employment at the former Starwood headquarters to fewer than 400 employees before 2019, it would have to pay back all of the state loans from 2009 and 2014, and would have to pay $1.7 million in taxes it avoided through credits. It also could have to pay 7.5 percent back on any tax credits it claims from now until the time it shrinks below 400 workers. With this reduction, the company will have about 500 employees in Stamford.

Bottom line

Starwood has a lot of great people working at their Stamford office, so it’s sad to see that they’ll be laying off about a quarter of the workforce there in the coming weeks. Despite Marriott’s takeover of Starwood, I’ve been impressed by how Starwood has still been going “full steam ahead” with their program, by introducing new partnerships, adding more SPG Moments events, etc. I fear that with a quarter of the workforce being cut, that may change starting next year.

Here’s to hoping that many of these great Starwood employees end up getting roles with Marriott.

Comments

  1. Same here in Cork, Ireland. Not sure how many but the employees got emails from HR announcing lay offs.

  2. Surprising because it’s rather a tough time of year to be laying people off. I hope the severance packages are decent for their sake.

  3. Nothing that an SPG executive was not expecting. Marriott acquired SPG and not the opposite. Thus, they knew they would not have a job since all the senior level people will come from the company that has the leverage in the deal.

  4. Those executives will probably get plenty of help finding new jobs, like English grads polishing their resumes for them and consultants searching on their behalf for comparable high-level positions. It’s not like ordinary joes getting the boot.

  5. @chancer: I agree BUT… And here is a big BUT. These guys work for a very specific industry called hospitality and with the consolidation that is happening there are not many companies out there for them to get jobs at the level they were with Starwood. Yes, if they were in technology, consumer goods, etc… there are several small and big companies they could work but how many hotel chains are out there that need a VP or Senior Director? I would guess not many.

  6. @ Santastico – If the execs maintain the attitude that they will only look for the same jobs they lost, in the same locations, obviously they will be out of work for a very very long time. I remember one former VP who told the job consultant I worked for to search in big cities only, which meant an opening for VP that matched his qualifications was off the table because he’d need to relocate from Los Angeles to Poughkeepsie. Yes, Poughkeepsie (I hear the giggles) but as the saying goes, beggars can’t be choosers. As for hospitality being a tough industry for job seekers, I think New Zealand has it on its list of desired skills. Plenty of opportunities around the world for those willing to uproot.

  7. I kind of wonder how many Starwood employees really want to work for Marriott. I suspect the culture is very different and there may be some bad feelings about the merger. I wouldn’t be surprised if some of the Starwood employees are more interested in something like Kimpton Karma, Voila, or boutique hotels.

  8. “Plenty of opportunities around the world for those willing to uproot.”

    Outside the US, work visas are very hard to get, especially for those workers over 40.

    Heck, just to retire in Ireland they require a yearly income of €100,000.

  9. Your retirement example is comparing apples and oranges. Someone emigrating to another country based upon skills that are in demand gets a visa based on a points system. Younger applicants get more points, but age is only one of many factors such as advanced degree and years of expertise which these laid off execs are likely to have.

  10. First, most senior people will have some sort of package negotiated. Second, while there may be opportunities outside the US, as has been suggested, that is not a realistic, or at least not an easy option, for those with kids in school, etc. Lastly, each nation’s visa criteria varies. A skills based point system is not at all universal.

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