. What People Are Saying About Marriott's 7% Commissions Policy | Meetings & Conventions Asia

What People Are Saying About Marriott's 7% Commissions Policy

(Credit: DragonImages/Getty Images)
(Credit: DragonImages/Getty Images)

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.