< PrevNext > Hotels Will Mess with Group & Meetings Commissions By Julie Sickel / January 29, 2018 / Contact Reporter Share Corporates funding their strategic meetings management programs entirely through commissions may want to create backup plans. This year could see one or two big players in the hotel industry lead the way in altering how commissions are paid out to intermediaries and corporates for group and meetings sourcing. This idea has come up more and more during the past three to four years. So why will it actually happen in 2018? With the consolidation of recent years, the big hotel companies have more power than ever to do away with things they don’t like. While a change in hotel commission structures would certainly affect those companies that rely on them as some part of their revenue stream or as rebates to their travel program, a number of consultants who spoke on background for this piece said the segment of the business that is sure to be most impacted is groups and meetings travel. “It’s going to explode,” one consultant said. Hotel commissions are what make many of today’s SMMPs work. Corporates and associations typically source hotels in one of two ways: They use intermediaries like travel management companies or meeting planning services like HelmsBriscoe and ConferenceDirect; these kinds of companies carry out the sourcing and then return all or a portion of the commissions they receive to clients. Or corporates forego the intermediary and pay a full-time internal person to source, using the commissions they receive from hotels to cover the headcount. Both ways allow corporates to fund people or technology without having to ask senior leadership for a significant investment. But hoteliers, from their own perspectives, are paying out significant sums of money to large intermediaries or corporates for group business they might have received regardless. As already has been demonstrated in recent years with cancellation policies and direct booking rates, all it will take is one major hotel to deploy a new structure for commissions before the rest of the industry moves in lock step. What a new commission model could look like is still to be decided. Hotels could focus on number of room nights in a tiered structure instead of percentages for each room night, paying out X commission for Y room nights and giving favor to SMMPs that can offer more room nights. Or hotels could pay commissions only if the corporation’s broader hotel program considers the property a preferred property. Whatever the model, if things change, the questions become: What happens to all the non-hotel players with skin in the game, and can corporates still prove the value of SMMPs once they have to ask for more funds from their organizations to make them happen?