Though roughly a year has passed since Marriott International kicked off a wave of group booking commission cuts within the hospitality space, travel advisers and meetings planners are still reeling from the blow.

Last January, Marriott became the first major hotel group to announce that it would reduce its commissions on group bookings at North American properties from 10% to 7%, effective March 31, 2018.

Hilton and InterContinental Hotel Group quickly followed suit, bringing their group bookings commission rates in line with Marriott's. Hyatt, meanwhile, hopped on the bandwagon in November, with its 7% group bookings commission rate set to start with business booked in the U.S. on or after Feb. 1.

Bonni Scepkowski, president and chief strategy officer for Stellar Meetings & Events, said, "We're adjusting, but it's been really disappointing. Since Marriott took that first leap, everyone has followed, including companies that said they wouldn't, like Hyatt. I just got my first 7% commission check from the past year, and it was a shocker."

While Scepkowski's commission cutback has largely been offset by her fee-based model, in which any commissions she earns are shaved off a client's fee, she has also pursued writing and training opportunities in order to diversify her income.

"Most of us will be raising our fees," she added. "I've been preparing my clients, and so there's been interest from their end in working with smaller, independent hotels that will pay that commission so that they don't have to." 

Jay Johnson, president of Coastline Travel Advisors, has also had to adjust his business strategy for group bookings, which account for some 35% of Coastline's total sales.

The reductions, Johnson said, have "affected how we cost group travel. We cannot survive on 7% commission, so we were forced to increase our service fee. We haven't lost business, but it's made explaining our fees to potential clients that much harder."

In order to help justify the increase, Johnson added, Coastline has opted to make some add-on services, such as the creation of conference name badges, complimentary.

"Before, we would charge a fee to create badges," he said. "We now offer those services for free as compensation for the higher service fee."

For Eric Hrubant, president of CIRE Travel, the commission cut is just one more concern in a litany of issues that come with booking a major chain property. 

"I'll never guide my clients to where I make the most money, but I will certainly guide them to where we have the most ease," Hrubant said, adding that group bookings account for around 25% of CIRE's business. "If I'm dealing with a big chain, I'm going to have to deal with someone at a corporate office and then also deal with someone at the hotel level. What will be easier for us, oftentimes, is working with smaller or independent hotels because everything is done in-house, and they're more flexible."

Hrubant added that the decrease in group commissions has not affected his bottom line so far, due in part to the fact that he's been working with chains and properties that have maintained or even increased their commission rates, such as AccorHotels and Loews Hotels.

Another hotel company that has temporarily raised group booking commissions in the wake of the widespread cuts is Denihan Hospitality Group, which increased its group commission rate to 11% last February and has since seen an uptick in group bookings. For example, Denihan reports that group business grew 15% over the past year at The Surrey in New York.

Anubha Choudhrie, director of sales and marketing for The Surrey, confirmed that "the majority of our portfolio witnessed a surge in group demand in 2018." 

Choudhrie added that Denihan is also running a promotion of up to a 13% commission across its portfolio for groups booked for January or February dates. 

Preferred Hotels & Resorts, meanwhile, debuted a 90-day "We Appreciate You" promotion early last year, offering 11% commission to agents and planners who book more than $100,000 in room revenue in contracts that closed by July 31, 2018. 

Elaine Macy, executive vice president of global group sales for Preferred Hotels & Resorts, reported, "It's spectacular how successful our offer was. Not only did we obtain new clients as a result of the promotion, we also generated approximately $200,000 in bookings. Many of our hotel members were inspired by our initial initiative and are now offering between 12% and 15%." 

Preferred's standard group booking commission rate is 10%.

Most recently, Dream Hotel Group said it would extend an increased 12% group commission rate, initially unveiled last April, through the first quarter of 2019.

Dream Hotel Group CEO Jay Stein said, "We got such a great response from the increase last year. And since we don't always have the typical big meetings space for planners to always automatically think about our hotels, it's great to have something that encourages them to come check us out."

He cited solid results at the Dream Hollywood, for example, which saw an increase of around $150,000 to $180,000 in group business for 2018.

But while the number of independent and boutique players offering high commissions is encouraging, travel advisers and meeting planners remain wary, with many bracing for further cuts. 

"I'm sure the 7% level will eventually be reduced over the coming years," Coastline's Johnson predicted. "However, I am always the optimist. How we operate our group business will undoubtedly change, but I'm confident that in the end, we'll find a way to make it work, and make it work to our advantage."


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