by Michael J. Shapiro, with extra reporting by Cheryl-Anne Sturken | February 07, 2018
Two weeks after Marriott's announcement that it would reduce commissions to group intermediaries from the standard 10 percent down to 7 percent, there remains some confusion in the marketplace about just when the change will occur across the board.
As Marriott International's chief sales and marketing officer Steve Heitzner indicated in his initial letter to group intermediaries, the reduction will go into effect March 31, 2018. But according to Maritz Global Events president David Peckinpaugh, who spoke with M&C right after Marriott's announcement, his company is one of four large intermediaries temporarily "exempt" from the reductions; a Marriott International spokesperson countered that while there are no exemptions per se from the rate change, there are some large third-party companies with which Marriott is honoring contracts that were already in place.
 
Details concerning the length of those contracts aren't being divulged officially. But according to a LinkedIn post from HPN Global regional vice president of sales Mark Dallman, which has since been removed, HPN associates will receive 10 percent commission from Marriott on anything booked until July 25. Between July 25 and Dec. 31, they will receive 10 percent on any group events booked for 2018, 2019 or 2020. For events booked in 2021 and beyond, and for any bookings after Dec. 31 of this year, their commission rate will be 7 percent.
 
HPN Global chairman and CEO Bill Kilburg wouldn't confirm that timeline, however, noting that HPN's global chain contracts were confidential. Similarly, a Maritz Global Events spokesperson directed such questions to Marriott; a spokesperson for the hotel giant was equally mum, saying, "We don't discuss terms and conditions of business contracts, but I can say that we are honoring existing contracts." Meanwhile, ConferenceDirect CEO Brian Stevens, above, said Marriott asked him not to provide any timeline details.
 
"We all get to 7 percent over time," said Stevens last week. "We are disappointed in this reduction, of course. The hotel market in the U.S. is at an all-time high and the stock market is also very high. Marriott stock was $18 in 2008 and now is $140.03 [as of Feb. 6]. They have north of 40 percent market share in most U.S. cities, with 30 brands.
 
"Marriott is a smart company," Stevens added, "and if this strategy is right, they will stick with it; if it backfires, they will likely reverse their course. ConferenceDirect is a customer-centric company, and our customers make the buying decisions. Time will tell if this new idea of 7 percent is a smart idea or not."
 

HPN's Kilburg noted that Marriott's intentions were clear when the company began the Starwood acquisition process. "It was pretty blatant that they were going to go after I think about $350 million in sales and marketing costs," he said. "So it's really not completely unexpected at this juncture, given this point in the cycle. The hotel business is cyclical, and it tracks GDP pretty closely. Business has been great for them, and they've got a big footprint; at this point in the cycle, this made sense to somebody at Marriott. It remains to be seen as to whether or not it's something that stays for the long term."

An executive from third-party giant HelmsBriscoe said his company wasn't ready to make an official comment yet.

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