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Marriott Will Reduce Group & Meetings Commissions

By Julie Sickel / January 24, 2018 / Contact Reporter
Business Travel News on X

Marriott International is reducing the commissions it pays to group intermediaries from 10 percent to 7 percent beginning March 31, 2018. The policy change will be a brand standard that will take effect at all managed and franchised properties in the U.S. and Canada.

Marriott global officer of digital, distribution, revenue management and global sales Brian King said the change is a "reset and rethink" moment for the company. "We've been looking at the demand that we're receiving from our customers and the amount of innovation that needs to take place in the group space from an end-user perspective, and then we've also been watching the pace of revenue growth and the pace of commissions, and they're just not commensurate with each other."

The policy may not come as a surprise to many in the meetings and events space, as fears that commissions would change have been growing the past three to four years, particularly in light of industry megamergers. One consultant speaking on background earlier this month, prior to any Marriott news, suggested the company had the power to do away with group and meetings commissions entirely. King, however, said that was never a consideration. "We're very, very committed to intermediaries and our partners, we're committed to our customers and we're committed to our hotel owners," he said. "It's a three legged-stool, and we are trying to strike the right balance that we can appropriately take care of each of those audiences, invest in the hotels appropriately so those customers can have experiences that they desire which will drive demand to our partners." But that consideration also had to make good economic sense for Marriott, he added.


What led us to the decision was trying to balance [intermediaries, customers and owners] and make sure that we make a decision that made good sense for all. … And frankly, it also had to make good economic sense for the business overall."

Marriott International's Brian King

Marriott's decision comes as the rest of the hotel industry is waking up to dysfunction in the group and meetings space and how much it's costing lodging companies.

Hotel benchmarking company Kalibri Labs on Tuesday released early figures from a report it intends to publish within the next month, compiled in collaboration with PwC. Kalibri estimates that 40 percent to 60 percent of group business is intermediated at the point of sourcing and at other points prior to execution. It also found that 2017 group room revenue totaled $30 billion in the U.S. and that the cost of intermediaries accounted for an estimated $1.3 billion. That's based on 43 percent of group room revenue being intermediated at a commission rate of 10 percent. When adding in other aspects like e-channel advertising, group block reservations processing and other technology costs, that figure is closer to $3.4 billion to $4 billion. On a single booking, costs to the hotel for commissions and those other technology costs can reach upward of 35 percent.

"Everyone knows that the system needs improvement," said Kalibri co-founder and CEO Cindy Estis Green. "What happened was that, on the digital side, instead of making it more efficient, companies like Cvent or Lanyon picked off one element of the process like the RFP part of the process and automated it. But by automating it, that doesn't make the whole thing efficient. It just put a spike in the complication factor."

Estis Green said the report is intended to provide a fuller picture to all sides of the meetings and events industry so stakeholders can make the booking process easier, faster and more convenient and reduce costs so suppliers, meeting planners and consumers can all benefit.

While Marriott is reducing commissions, King said, the company also has been investing to improve groups and meetings. He pointed to initiatives like its online meetings training program, Meetings Excellence, as well as its centralized group commissions and group intermediary website, which launched in 2008.

Those improvements and the promise of more, however, may come as little comfort to strategic meetings professionals who see commissions as critical to making their programs financially viable. Many SMMPs rely on commissions to pay for technology licensing or internal meeting planners. Similarly, businesses banking on commissions to support their economic models, such as ConferenceDirect and HelmsBriscoe, will take a direct hit.

While Marriott's commission policy takes effect March 31, Marriott will still pay a 10 percent commission on any contracts signed prior to that date.

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