by Danny King | February 05, 2018
In the wake of Marriott International announcing cuts to its group commissions, some hotel industry analysts and agents are suggesting that the lower commissions might not be ironclad and that there could be a tiered-commission structure in the works for group bookings, according to M&C's sister publication, Travel Weekly.

Last month, Marriott said that beginning March 31, it would reduce its commission rate on group bookings to 7 percent from 10 percent.

Chekitan Dev, professor of marketing and branding at Cornell University's School of Hotel Administration in the SC Johnson College of Business, said Marriott might be resurrecting the strategy it employed with its Hotel Excellence training program. Marriott launched the program in 1999 with a commission-rate cut but gave agents a chance to earn back commission points.

A Wyndham Hotel Group spokesperson confirmed last week that the company had no plans to alter its 10 percent commission rate "in the near future." And while representatives of Hilton and InterContinental Hotels Group (IHG) declined to comment on the policy change, no other major hotel group, as of last week, had indicated it would follow Marriott's lead, according to both ASTA CEO Zane Kerby and Jennifer Wilson-Buttigieg, co-president and co-owner of Valerie Wilson Travel.

In fact, on Thursday, Preferred Hotels & Resorts, which pays a standard 10 percent commission, debuted a 90-day promotion whereby agents and planners who book more than $100,000 in room revenue will get an 11 percent commission.

"It's a smart move," Dev said of Marriott's rate cut. "It doesn't make sense to give 10 percent for some one-off group versus someone more dedicated with more [sales] volume. The downside is that it's very ham-handed."

Elaine Macy, executive vice president of global group sales at Preferred Hotels & Resorts, said, "I think decreased commissions will be the wave of the future for the larger chains. Looking ahead, I believe we will see that most large franchise brands will reduce commissions across the board and then have some type of back-end volume bonus for the major third-party planners to reimburse them for lost commission."

A Marriott spokesperson declined to comment.

Marriott acquired Starwood Hotels & Resorts in 2016, making it the world's largest hotel company and giving it control over more than 6,400 hotels totaling more than 1.2 million rooms globally.

Because of Marriott's size, the decision to cut group commissions has some in the industry comparing it to the airlines' decision to reduce commissions in the mid-1990s, with some agents saying they would try to tweak their sales strategy away from Marriott brands.

Read more at Travel Weekly's website.

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