Not everyone reacted with outrage when Marriott International said it will cut third-party commissions recently. The hospitality giant will reduce commissions from 10 to 7 percent for U.S. and Canadian hotel bookings starting in April. Instead, some see an opportunity for professional planners to be paid what they are really worth.
Case in point: Mike Tenholder, etouches vice president of channel and partner management, reacted with a shrug when he heard the news. “It didn’t surprise me,” he says. “The scuttlebutt has been going around for a year. I just didn’t know what form it would take.”
Tenholder equated Marriott’s decision to a price increase, similar to when airlines cut commissions to travel agents, but didn’t lower ticket prices. He predicted other hotel brands will do the same eventually. “Marriott was the first, and they got a black eye, but it will be difficult for planners to stop placing business there—because they are everywhere,” he says. And while some brands tried to gain market share by actually raising commissions in the wake of the announcement, he doesn’t see that as sustainable. “The others will follow suit at some point,” he says.
However, rather than the angry reaction that has led Senior Planners Industry Network to start a petition for commission parity and Meeting Planners Unite to launch a social media group, Tenholder sees an opportunity for independent planners. He thinks they should see this disruption to their business model as a chance to forge a more strategic relationship with customers. “Meeting planners provide more value than any commission,” he says. “It doesn’t seem fair that the traditional model has left it to the vendor to decide how much planners’ services are worth.”
According to Tenholder’s calculations, sourcing is only 10 percent of the work most planners do for companies. Their wealth of experience and data insights are where they really add value in controlling costs and enhancing the final experience. “This is a golden opportunity to shift their role to working as advocates of the customer rather than as an agent of the supplier,” he says. In this scenario, charging the customer for work done—rather than being paid a percentage of business booked by the venue—would bring more transparency to the transaction and help to communicate the value delivered. This model could come in the form of a management fee based on per/person stats or a bundled price. “This removes the hocus pocus,” he says.
Leveraging Tech Tools
The event technology executive sees digital tools as a way to magnify the value planners bring. “Planners can use automation for tactical tasks and focus their time on being strategic on behalf of customers,” Tenholder says. “The ultimate success of the event is the end goal regardless of commissions.”
If properties continue to cut commissions and planners need a quick way to book rooms without conference space or F&B, start-up companies such as Stay22 offer real-time, Expedia-like options for booking individual hotel and Airbnb nights with a split commission model.