The news
on Jan. 24 that Marriott International will reduce groups and meetings
commissions from 10 percent to 7 percent sent some in the corporate travel
community reeling, while others said they had known it was only matter of time.
One email to BTN, from a meetings consultant who preferred
not to be named, said early conversations with buyers indicated they would
encourage use of other hotel chains. But that response sounds eerily familiar.
The past two years have seen the hotel industry, or at least
its largest players, move somewhat in unison to adopt policies that corporates
say harm their programs. Most recently, Marriott and Hilton adopted
stricter, 48-hour cancellation policies across their systems. Corporate travel
professionals said the policies would encourage business travelers to take
their business elsewhere. But how are programs supposed to avoid two of the largest
hotel chains in the U.S.? Furthermore, where are they supposed to go so when other
hotel companies follow suit? InterContinental Hotels Group later adopted a
24-hour policy, and Hyatt Hotels Corp. instated a 48-hour one.
The changes mimicked the deployment by the majority of the
major hotel companies of loyalty member direct-booking
rates in 2016. Such rates were designed to restrict the power of online
travel agencies. That move and the megamergers of recent years had corporate
travel community members suspecting
that large meetings intermediaries were next and that Marriott, with the
largest hotel portfolio in the world, would make the first move for others to
follow.
"I am not surprised," said strategic meetings
consultant Betsy Bondurant, president of Bondurant Consulting. "It makes
sense that the world’s largest hotel chain would be the one to lead."
Bondurant, a member of GBTA's meetings committee, pointed to an
article the group published in July 2017 in Corporate & Incentive
Travel that warned meetings professionals to prepare for an elimination of commissions.
Informatica senior procurement analyst for meetings and
events Marjan Ghaffari said she's built her company's meetings program to be
cost neutral to the meeting owner and to the company with the help of
commissions. Now, she said, she'll have to "reset and rethink." Nevertheless,
she understands the policy change. "The relationship is not working for
them. ... There's not an equilibrium for [Marriott]. With this, they'll be able
to make improvements on their end on the technology side and just make it
easier for sourcing agents to do their job," she said.
Partnership Travel Consulting chairman and CEO Andrew Menkes
said the bigger picture is that paying commissions is a holdover from a
decades-old way of doing business. "If Marriott or any other hotel chain
says the time has come to change the model going forward, they have a right to
do it as much as the airlines had a right to initially eliminate airline
commissions here in the U.S. and minimize overrides compared to what they were
before," Menkes said. "You can't rely on former models to sustain
your revenue model going forward because times are changing and commissions
should be tied to performance."
Still, others said the decision will severely impact strategic
meetings management programs, and they took issue with what they perceived as
Marriott's preferential
treatment for large booking companies. "All of my SMM colleagues are
scrambling, putting together revised cost/benefit analyses on their meetings
programs that had previously been funded by commissions, now wondering where
the money will come from for their headcount and technologies," SMMP expert
Debi Scholar wrote in a
post titled Marriott’s Disparity
and the impact on Strategic Meetings Management. "Further inequity,
in this insensitive decision, is the decision by Marriott to exclude four
sourcing organizations from the reduction from 10 percent to 7 percent
commissions. Marriott has elected to temporarily continue to give 10 percent. …
[SMMPs] are at risk with these decisions." Scholar pointed to the use of
Airbnb as a possible alternative some meetings leaders are considering.