Marriott International's decision to cut commissions paid to third-party meeting planners from 10 percent to seven per cent for all of its hotels in the US and Canada is causing an industry uproar.
The commission reduction will take effect March 31, 2018, but will remain at 10 percent for countries other than the US and Canada. Marriott, the largest hotel company in the world, will pay the 10 per cent commission for contracts signed prior to March. 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 mega-mergers."
Some commentators have suggested that 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."
While Marriott's commission policy takes effect March 31, Marriott will still pay a 10 per cent commission on any contracts signed prior to that date.