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
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
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
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
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."