inVOYAGE joined incentive industry association SITE GB’s ‘Don’t Mention the C Word’ debate on the hot topic of hotel commission cuts at Andaz London last week.
A panel of agencies and hotel representatives discussed the implications of recent announcements from Marriott and Hilton that commission paid to third party agencies would be slashed from 10% to 7% for group bookings made at their US and Canada hotels.
Pauline Bergé, Regional Director of Luxury Sales – Luxury Brands at Marriott International, kicked off the debate explaining that Marriott’s decision was very much a hotel-owner led initiative, due to the rising cost of sales and need to reinvest more in product innovation, adding that the hotel group still very much values third party intermediaries and the business they bring.
On the other side of the debate, CEO of Trinity Event Solutions Jacqui Kavanagh said the cuts were incredibly disappointing for venue finding agencies such as Trinity, which are based on a commission model. “To take 30% of our income and livelihood – don’t expect it to happen without a reaction. It will have an impact on that hotel brand. Small agencies have a voice and we can be incredibly influential with our clients,” she said.
The panel agreed that it’s likely other hotel groups could follow suit, which may result in a similar scenario to the airline industry, where commissions were slashed from 10% to almost zero forcing many third-party travel agencies out of business.
The debate also turned to corporate clients, and whether they need to be re-educated about the value venue finding agencies provide. While panel members agreed that charging a professional fee for venue finding would be the ideal business model, Kavanagh pointed out clients are not used to paying for these services, so it would essentially mean a change to the entire business model.
At the end of the debate, 46% of the audience were convinced that the commission cuts are not a good thing for the industry (compared to 30% at the start), though 44% remained undecided.
The panel featured: Iain Robertson, Regional Director of Sales, EMEA of Four Seasons Hotels & Resorts; Des McLaughlin, Leading Consultant & ex MD of Grass Roots; Jacqui Kavanagh, CEO of Trinity Event Solutions; Danny Pecorelli, Owner & MD of Exclusive Hotels; Shaun Casey, Head of Events at BI Worldwide; and Pauline Bergé, Regional Director of Luxury Sales – Luxury Brands at Marriott International.
The debate was moderated by Padraic Gilligan, Managing Director of Dublin-based Marketing Consultancy Soolnua & Chief Marketing Officer for SITE Global.