by Cheryl-Anne Sturken |
January 01, 2008
Marriott veterans
Joel Pyser (left)
and Mike Beardsley
jumped ship to start
third-party Inn Fluent.
Over the past several
years, the third-party segment of the meetings industry
has swelled, and commission payments made to third parties by
hotels -- a standard 10 percent on room rate -- have grown
exponentially.
Last year, however, several new twists
were introduced, forcing this formerly unregulated body of industry
players, which now number in the thousands, to play by new rules --
and with new players who are determined to shake things up.
Marriott update
In June 2007, Washington, D.C.-based
Marriott International, which estimates its commission payouts to
third parties totaled roughly $90 million in 2006, rolled out a new
policy aimed at centralizing and automating commission
payments.
In a nutshell, any third party or group
intermediary doing business with any of Marriott’s 2,800 properties
worldwide must be registered with the International Airlines Travel
Agent Network (IATAN), a process that requires proof of legitimacy
and liability insurance and an annual fee. “In the beginning there
was a lot of uncertainty,” says Marriott’s Julius Robinson, vice
president, sales intermediaries, who stressed that the hotel
company’s new policy was driven by a need to streamline its
commission payment system across its brands, rather than a move to
eliminate third parties. “But once we got through that initial
period and people saw centralized payments and statements, they
could see it was a partner benefit, not a punishment.”
* Third parties jump on
board. Now seven months into its new policy, Marriott
executives say more than 2,000 “intermediary partners” have
received IATAN accreditation, which represents more than 90 percent
of the hotel chain’s group business booked through third
parties.
The initial knee-jerk reaction of
doubt, skepticism and downright hostility by many third-party
companies has largely dissipated, says Robinson, as they enjoy the
added benefit of faster commission payments. With the new policy,
checks are cut about 45 days after an event is completed, rather
than 30 days after the close of the event’s master account. In
addition, the new system allows third parties to receive
consolidated commission checks for multiple meetings.
* Internal challenges.
“Trying to launch any new industry-changing program with a
systemwide distribution of 2,800 hotels is daunting,” says Stacie
Canova, Marriott’s senior director of sales intermediaries.
“Because the program touches so many entities within the
properties, from finance to sales, everyone had to know their
role.”
To get its people on board so that they
in turn could answer the concerns of third-party clients, Robinson
and Canova initiated a communication blitz that ranged from
conference calls to training guides that outlined a step-by-step
process for the new procedures. “To say we overcommunicated is
probably an understatement,” says Canova.
* Looking ahead. For
the moment, Marriott says it will limit its policy to any North
American intermediary doing business with any of its hotels
worldwide. However, the chain has begun looking into the
possibility of including third parties abroad. “There are just so
many nuances that don’t exist here,” notes Robinson. “For example,
in the United Kingdom, they pay commission on wine purchased in
advance.”