Marriott Readies Net Rates For CTD Designees

<B> Marriott Readies Net Rates For CTD Designees</B>

By Maria P. Vallejo

<I>Washington D.C.</I> - Preparing for a change in the way hotels and corporations interact, Marriott International this month began a program that will offer net rates to travel departments that are accredited by the Airlines Reporting Corp.

Marriott executives say the program will result in corporate discounts at more properties nationwide for companies that go through the new process of becoming ARC certified.

Corporate hotel buyers who until now were unable to get preferred rates at Marriott locations due to small volume will be able to secure discounts as they get Corporate Travel Department accreditation, said Fred Miller, Marriott's vice president of intermediary sales and marketing.

"Corporations are more interested in rate than commissions," said Bruce Wolff, Marriott's senior vice president of distribution sales and marketing."Those companies that do business with us are going to get lower rates in places where they put that business."

Not all companies that are ARC accredited will be eligible for Marriott's net rates, however. Rather, individual Marriott properties will determine the recipients based on their buying patterns and the amount of business they traditionally have driven into the local property. Properties already involved in preferred deals with CTD-accredited companies will not offer the net deals, because that would lead to deeper discounts on already reduced corporate rates.

Marriott is preparing itself for what it expects will be an increase in accredited CTDs next year. Several corporate buyers are in the midst of discussing the new process with their executives, Miller said, and are planning to apply formally for the ARC accreditation in 1999.

The ARC pilot program, which debuted in May (<I>BTN,</I> March 16), has garnered much attention but few customers so far. By the end of the year, ARC will remove the "pilot" status from the first corporation to try the program, Republic National Bank in New York. Meanwhile, it is looking for 11 more corporations to try pilot programs in 1998, and if all goes well, next year will open up applications for CTD accreditation to all interested parties.

Marriott began researching the feasilibility of offering net rates after its executives realized some properties could mistakenly send commissions to ARC-certified companies, believing them to be travel agencies. Like most of the hospitality industry, Marriott has a policy against paying commissions to corporate accounts.

"We realized that if we did nothing with the ARC number, commissions would be paid in an area that had not been paid in the past," Wolff said. "If the company doesn't take any action, the way systems are set up, bookings made with an ARC number will get a commission, and commission checks will automatically will be sent."

Surveying its corporate customers in May, when the CTD option was first offered, Marriott found that travel managers initially said they prefer receiving commission checks. But after a series of dialogues, most decided that net rates were the better way to go. Those findings were the result of a survey of corporate clients, travel managers, travel agents, association members, travel consultants and non-hotel supplier companies conducted primarily by Marriott, with the assistance of the Association of Corporate Travel Executives and the National Business Travel Association. About 1,500 members of ACTE and NBTA were surveyed.

The results, Miller said, showed that travel buyers "preferred the savings up front rather than getting a commission. In the long term, all corporate accounts want to save money."

Miller noted that receiving and disbursing commission payments results in double taxation, while net rates reduce costs to the corporation without increasing its tax liability.

Despite these benefits, some analysts are skeptical of the positive impact of net rates on ARC-accredited CTDs, arguing that travel managers still prefer receiving commissions.

"The most significant benefit of the CTD is that corporate travel departments can claim commissions from hotels," said senior consultant Rolfe Shellenberger of Runzheimer International. "What Marriott is saying is, don't become a travel agency to get commissions from Marriott. But today hotel commissions are very important, and they should be given more importance. Travel managers should show their dismay with hotels that don't pay commissions."

In general, Shellenberger said, hotels are receiving excessively high rates--and not offering commissions to travel departments only bolsters the impregnability of their pricing. Commissions could help reduce corporate hotel spend, especially in the current market.

"Over the years, hotels have not paid their dues to the travel agency community," he said. "They've been getting a free ride. They really don't have to do any favors because no one raises questions about the price of hotel rooms. The whole industry is riding along with these ridiculously obscene rates.