A number of smaller hotel companies and individual properties
have been quick to launch promotions that increase group
commissions since Marriott International announced last week that it
would cut group commissions from 10% to 7% for properties in the U.S.
Independent Preferred Hotels & Resorts launched a 60-day promotion called "We Appreciate You,"
which offers intermediaries an 11% commission and 150,000 I Prefer Reward
Points for programs in excess of $100,000 in room revenue that are booked by
April 1 and have contracts that close by July 30.
Elaine Macy, Preferred Hotels executive vice president of global
group sales, said reducing commissions may be "the wave of the future for larger chains," while it is still very early to tell.
"Looking ahead, I believe we will see that most large
franchise brands will reduce commissions across the board and then have some
type of back-end volume bonus for the major third-party planners to reimburse
them for lost commission," Macy said. "While it is unfortunate and doesn't have any heart, I
do see the business sense for these large chains as they try to take in pure
volume based on the number of hotels they have and cut out the smaller
Macy added that the reduced commission can only benefit
smaller hotel companies.
"I think this trend will be fantastic for
Preferred Hotels & Resorts and our member hotels," she said. "We
are maintaining our standard 10% commission level and staying true to all of
our clients -- especially the smaller independent planners, who we value highly.
It will allow us to be more visible in the industry, allow us to attract
business we may never have had the opportunity to bid on before, help planners
get to know Preferred Hotels & Resorts as a brand and help us develop
long-term relationships with our clients -- small- and large-size agencies --
on behalf of our brand and member hotels."
Individual hotel properties are likewise hoping to make
"I am taking their 3% and adding to my 10%, and providing 13%
commissions to anyone who places business in my hotel before their target date
of March 31, 2018," wrote Mark Mares, senior sales manager of the Eldorado
Hotel & Spa in Santa Fe, N.M., referring to Marriott's commission-reduction
date. Mares hasn't yet received any bookings as a result of that promotion, but
he didn't necessarily expect to.
"I just want to support all parties in their sourcing
efforts during these challenging times," he explained. The offer is good
for any new meetings business and is applied to rooms, not catering or
Similar promotions are popping up at a rapid clip. The Plaza
Hotel and Casino Las Vegas is offering 12% commission for meetings booked this
year, and the Eden Roc Miami Beach and the Nobu Hotel Miami Beach have
increased commissions to 12% for groups that book a minimum of 10 rooms per
night through the end of the year. The Thompson Toronto is promising a 14%
commission on guest rooms for any group bookings that entail arrival dates
before April 30 of this year.
Meanwhile, will larger hospitality companies follow Marriott's lead, or will they
try to leverage Marriott's move as a competitive advantage?
"I do think this is an opportunity for hoteliers to
take a firm stand, one way or the other," said Flavia St. Clair, principal
with PCM & Associates, an independent site-selection, venue-sourcing and
Perhaps predictably, many of the larger hotel companies have
been reluctant to come out too strongly either for or against Marriott's cuts,
clearly favoring a wait-and-see approach.
"As a leading provider of meetings and events, Hilton
works with a number of valued partners to attract business and leisure group
bookings," noted a Hilton spokesperson shortly after the Marriott announcement
came. "Although we have no updates to our group commission payment policy
to announce today, Hilton continuously reviews its sales and distribution
strategies to ensure that we are offering the best value for our owners, hotels
Spokespeople from Hyatt, Accor and Kimpton declined to
Other hoteliers did attempt to convey the notion that
third-party planners were highly valued, regardless of what the future holds
for the commission models.
"While we will always evaluate our distribution
channels and associated costs," said Dan Surette, vice president of sales
for Omni Hotels & Resorts, "at this time we are not planning to make
any changes to our existing commission structure for approved group
intermediaries. We value the relationships that we have with our partners and
see them as an extension of our team. We also appreciate their knowledge of the
industry and the business they bring to our hotels and resorts throughout the
Michael Dominguez, chief sales officer for MGM Resorts
International, underscored his company's decision to maintain the status quo.
"MGM Resorts will not be changing its relationship with
our intermediaries," he said. "We have partnered very effectively
with these intermediaries over the past few years in placing our group business
with the appropriate availability and with pricing models that work for all
involved. These partners have shown incredible loyalty, and this was no more
evident than during our most trying times last year."
Cheryl-Anne Sturken contributed to this report.
Source: Meetings & Conventions