The news on Jan. 24 that Marriott International will reduce
groups and meetings commissions from 10% to 7% sent some in the corporate
travel community reeling, while others said they had known it was only matter
of time.
One email to Business Travel News, 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 when other
hotel companies follow suit? InterContinental Hotels Group later adopted a
24-hour policy, and Hyatt Hotels Corp. adopted 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 the Global Business Travel Association'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 (strategic meetings management) 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," strategic
meetings management program expert Debi Scholar wrote in a post titled "Marriott's
Disparity and the Impact on Strategic Meetings Management."
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Source: Business Travel News