The North American corporate travel, meetings and events industries alike all heaved a collective groan recently after receiving an email from Marriott International.
The announcement states Marriott will cut commission rates to all group bookings made in its US and Canadian properties from 10% to 7% starting on 31 March. In the letter, Marriott said that it would honour the 10% commission fee for all contracts signed prior to that date.
While Meetings & Conventions reported that the controversial letter was sent by Steve Heitzner, chief sales and marketing officer for the Americas, Travel Agent Central countered by saying it came from Tammy Routh, senior vice president of global sales.
Travel Agent Central added that its copy of the email indicated that Marriott is the first lodging company to centralize group intermediary commission payments, with a standing policy to pay commissions 45 days after an event ends.
This decision comes as many companies in the hotel industry are counting their expenses in the MICE space. It may have been affected by early analysis of US data gathered by hotel benchmarking startup Kalibri Labs in collaboration with PwC which, as per a Business Travel News report, aimed to convince meetings and events industry stakeholders to make the booking process easier, faster, more convenient and more cost-efficient for the benefit of suppliers, meeting planners and consumers.
Smart Meetings reached out to an anonymous Marriott spokesperson, who clarified:
“At Marriott International, meetings and events represent a critical part of our business. The current business model and environment, however, present significant obstacles to making the investments needed.”
Marriott global officer of digital, distribution, revenue management and global sales Brian King defended the move as a “reset and rethink” moment for the company.
“We’ve been looking at the demand that we’re receiving from our customers and the amount of innovation that needs to take place in the group space from an end-user perspective, and then we’ve also been watching the pace of revenue growth and the pace of commissions, and they’re just not commensurate with each other,” he told Business Travel News.
He also asserted that the firm would not remove group and meetings commissions altogether. “We’re very, very committed to intermediaries and our partners, we’re committed to our customers and we’re committed to our hotel owners,” he said.
“It’s a three-legged stool, and we are trying to strike the right balance that we can appropriately take care of each of those audiences, invest in the hotels appropriately so those customers can have experiences that they desire which will drive demand to our partners.”
King added that Marriott continues to invest in improving groups and meetings, like its centralised group support desk and its group intermediary website which launched in 2008. Both he and the Travel Agent Central letter also cited Meetings Excellence!, a free online training and accreditation programme for group intermediaries which provides discounts to certain Marriott properties upon course completion, and Marriott’s Convention & Resort Network, “a collection of 100+ of the largest convention and resort hotels across The Americas.”
“We’re very, very committed to intermediaries and our partners, we’re committed to our customers and we’re committed to our hotel owners.”
But those improvements and promises provide small comfort to strategic meetings professionals who rely on commissions to make their programmes financially viable. Group hotel bookings have become an important source of revenue for TMCs, travel agencies, event planners and meeting professionals after airline commissions disappeared and cruise lines began going directly to consumers, even making certain cruise fees non-commissionable.
Many third parties that process group bookings are up in arms over the revenue cut, while even more of them worry that other hospitality companies may follow suit given the increasing number of industry mergers, with Marriott itself in the lead after recently absorbing Starwood Hotels and Resorts.