A letter from Hyatt Hotels Corp.'s global head of sales and
revenue Jack Horne announcing the company's decision to cut meetings
commissions from 10% to 7% landed more like a feather on the desks of meetings
professionals last week, compared to the anvil dropped by Marriott
International in January.
Hyatt's commission reduction will start with business booked
in the United States on or after February 1, 2019.
Since January, both Hilton and InterContinental Hotels Group
joined the 7% club, and for meetings pros contacted by Business Travel News, it
was just a matter of time before Hyatt joined the other big industry brands in
making the change.
"Hyatt's decision didn't come as a surprise," said
corporate meetings professional Amy Perrone, who works in the pharmaceutical
and healthcare industry. Meetings consultant Betsy Bondurant agreed. She was at
a meeting professional conclave when the news hit. "It was pretty much a non-issue,"
Bondurant said, characterizing an industry resigned to 7% as a new normal.
According to Hyatt vice president of global sales Gus
Vonderheide, the company was feeling the competitive pressure. A forecasted
slowdown in the U.S. hotel market going into 2019 may have also driven Hyatt's
"As market conditions continue to shift, we are forced
to look at our business holistically," Vonderheide said in an emailed
statement to Business Travel News. "We have carefully evaluated our
commissions structure to ensure it meets the needs of our constituents and
remains competitive in the market. We did not arrive at this decision easily."
GoldSpring Consulting senior vice president Kevin Iwamoto
said not only are the "millions and billions of dollars" reclaimed by
hoteliers who've already cut commissions "too compelling to pass up,"
but also by reducing the money paid out to intermediaries, hotel companies are
better able to compete on rate. "The real question now is whether the
chains will seek to improve their revenue margins further by imposing
commission reductions either via [geographic] region or globally," he
added. "I think we'll all find out the answer to that question in 2019."
Whether the current players in the 7% club take a global
approach or not, Bondurant predicts they will add more members to their ranks. "Other
hotel chains will continue to follow," she said. "A few chains will
be holdouts for a while and offer commissions as a differentiating factor. I
think commissions will eventually become dynamic. If there's a need period,
there is going be some type of a rebate offered to entice business."
Source: Business Travel News