Will Marriott’s Cut in Commissions to Third Parties Increase Costs for Meetings?
By JT LONG
Planners are reacting with a range of emotion to the announcement by Marriott International that it will cut commissions to third-party planners for bookings—and predictions that the move could impact their clients.
After months of rumors, Marriott said in a letter sent Jan. 24 to some third-party planners that it would cut the standard 10 percent commission for bookings to 7 percent for U.S. and Canadian hotels.
“While group intermediaries play an important role in the marketplace, costs for our North American hotels and owners are growing at a faster pace than group revenue, which impacts hotel profitability,” the letter read. “To strike a balance and ensure the long-term health of our business, we will reduce commissions to intermediaries from 10% to 7% for all properties in the U.S. and Canada, effective March 31, 2018.”
“I am still going to deliver the best product for the event, even if it is a Marriott property,” said Kate Christensen, president at KCA, an association and event management company in Phoenix, said. “But this will affect prices.” She, like many planners, often shared her commission with clients or donated a portion to their designated charity.
Christy Lamagna, master strategist at Strategic Meetings & Events in New Jersey, compared the change to what happened in the airline industry after deregulation and mergers in the 1980s. “Airlines stopped paying commissions to travel agents, and you started to see fees. I hope it doesn’t go that way in the planning industry,” she said.
“I am horrified, but not surprised,” Lamagna said. “After the merger with Starwood, we have so few choices and others could follow.”
Some planners worried aloud about whether other hotel companies would follow Marriott’s lead. “The entire industry could start doing this,” Lamagna said.
A Marriott spokesperson reached on a flight after the change was announced, stressed the importance of meetings business. “At Marriott International, meetings and events represent a critical part of our business as well as an opportunity to drive innovation and win with customers. The current business model and environment, however, present significant obstacles to making the investments needed to deliver a world-class experience for customers.”
Since publication, Marriott International confirmed that it is “honoring existing contracts” and four large companies will reportedly not see reduced commissions starting in April: HelmsBriscoe, HPN Global, Experient and HelmsBriscoe.
Paul Van Deventer, president and CEO of Meeting Professionals International made the following statement. “Third-party organizations have become an integral part of the live events industry value chain and are a proven and important resource for planners, destinations and venues. As in any business relationship, the value of services provided needs to be determined by the organizations benefiting from said services.”
