by Cheryl-Anne Sturken | January 01, 2008

Joel Pyser and Mike BeardsleyMarriott 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.”