In agents' eyes, Marriott's reduction of commissions on
group bookings from 10% to 7% is reminiscent of the airline commission cuts of
the 1990s, and it made Marriott the Goliath to their David.
In a Jan. 24 letter to agents, Tammy Routh, senior vice
president of global sales for Marriott International, outlined the change.
Starting March 31, group-booking commissions on all properties in the U.S. and
Canada will be reduced.
Standard group commissions are generally 10% to 12%, with
some as high as 15%. A group is typically defined as a single booking of 10 or
more rooms, but that can fluctuate. Marriott said its group definition is 10 or
In the letter, Routh said, "We understand the value
these third parties bring, and they are also important business partners to
"At the same time, Marriott's group distribution costs
are growing faster than our group revenue; these costs are limiting our ability
to invest in meetings products, experiences and innovation. Changing economics
in this segment, plus these growing costs, required us to reevaluate our
intermediary compensation model."
Agents decried the move.
"It just sends a terrible message of, 'OK, fine, we're
going to pay you less for the same amount of service that you do for your
clients,'" said Jay Ellenby, president and CEO of Safe Harbors Travel
Group in Bel Air, Md.
Ellenby is also the chairman of ASTA. He said the Society's
leadership was in talks with both Marriott and agency and consortium members
last Thursday, trying to determine the full impact of the decision, including
whether the announcement supersedes preferred agreements with agency networks.
Marriott would not discuss specific contracts.
In late 2015, Marriott announced it would acquire Starwood
Hotels & Resorts, creating what was by all accounts the world's largest
hotel company. That acquisition was completed in September 2016. Now it appears
that Marriott is looking to reduce its operating expenses by lowering
distribution costs, said Marc Casto, president and CEO of Casto Travel in San
"Do they really think that the most significant [cost
savings] can be found in discriminating against alternative distribution
channels?" he asked.
Consortia last week also came out in opposition to the
Michael Heflin, senior vice president of hotels for Travel
Leaders Group, said, "It is unfortunate that Marriott has failed to
recognize the tremendous value travel agents bring to group bookings and has
instead chosen to view their agent partners as just another expense item."
Matthew Upchurch, chairman and CEO of Virtuoso, said he was
concerned about the move "and the perceived diminishing of the travel
adviser's value that it signifies."
Marriott's decision will likely mean a change in where
agents book groups.
Eric Hrubant, president of New York-based CIRE Travel, a
division of Tzell, said he would still book groups at Marriott if it is in his
clients' best interest, but he would also present them with other options.
"Marriott's never been an agent-friendly company.
Starwood was," he said. "There are a lot of wonderful companies out
there like Accor and Fairmont, Hilton within reason and so many more
independent properties. For travel consultants, it's kind of like, 'OK,
Marriott, if you want to play Goliath on this, feel free. I'm going to try to
serve my clients the best way possible.'"
The move will change things at Coastline Travel Advisors in
Garden Grove, Calif., according to president Jay Johnson.
Marriott, previously Coastline's first choice for corporate
events because of its size and scope, will become its last choice. And when it
does use Marriott, Johnson said, Coastline will be forced to pass the 3%
difference on to clients via a planning fee. While Coastline already charges
the fee, going forward, he said it will be increased when booking Marriott
"They will not be the first hotel chain we call,"
Johnson said. "They will be a last resort."
For some agents, Marriott's move echoed a ghost of the past:
airline commission cuts.
"It's kind of like the first hit of Delta with the
agent commissions," said Jeffery DalPoggetto, an affiliate of Andavo
Travel in Larkspur, Calif.
He was concerned other companies might follow suit with
Hrubant agreed that is a possibility, but he said it also
presents other hotel companies with an opportunity to court more agent business
by upping commissions by a percentage point or two.
"I know that might be a little bit of a pipe dream,"
he said. "But you know what? There is a lot of competition."