David Bruce, managing partner of CMP Meeting Services LP
Disgruntled independent planners rallied quickly following Marriott's Jan. 24 revelation that commissions for group business in the U.S. and Canada will drop from 10 to 7 percent on new contracts for meetings that take place starting March 31, 2018. Within days, David Bruce, left, managing partner of CMP Meeting Services LP in the Dallas area, created a dedicated LinkedIn group, called Meeting Planners Unite, with a corresponding Facebook page. The group had more than 130 members as of today.
And, on Jan. 27, Shawna Suckow, CMP, founder and chair of SPIN, the Senior Planners Industry Network, posted a petition calling for signatories to "demand equal commissions from Marriott for ALL intermediaries," in reference to the fact that four largest third-party firms will be temporarily exempt from the cut, as Marriott will honor their existing contracts. "I don't know what will change from this, but we couldn't just stand by and do nothing," Suckow told M&C.
Lori White, CMP, director of convention and meeting sales for Destination Niagara USA, is among those who signed the petition. Before joining the Niagara bureau in 2010, she spent more than four years in group sales for Hyatt Corp. And, no, she did not see this coming.
"Other folks I've talked with weren't surprised, but I genuinely was," said White. "Here you've got people with passion and experience …. Their contribution to the business-events industry cannot be discounted, but this does just that. People need to recognize intermediaries for what they are -- entrepreneurs. As entrepreneurs, they rely on getting compensated for their services. That's support-worthy.
"The independent planner has played a huge part in growing our business-events industry," White added. "They operate with their client's full knowledge of the commission structure. And their clients find the service they provide valuable, so why any hotel would take exception to what their clients think is valuable is beyond me."
Other planners have been grousing about the lack of adequate warning to adjust their pricing structures and business models, and noted that the hotel industry is experiencing a "golden age" of profitability that is expected to continue for several more years, thus Marriott's justification that the 10 percent commission is not affordable falls flat for many.
Corporate planners, too, told M&C this change will undermine most strategic management programs, which rely heavily on third-party sourcing and typically do not pay for that service.
Among those at the forefront of the resistance is David Bruce, who within days of Marriott's announcement created the Meeting Planners Unite LinkedIn group, with a corresponding Facebook presence. The group's purpose: "To show to the hospitality industry the power of the independent planner and the unity we have as an industry to change the way the true independent is portrayed."
M&C caught up with Bruce to discuss his fledgling group -- and his strong feelings about this significant industry development. Following are highlights from that discussion.
How big is this for independent meeting planners?
It's a watershed moment for our industry. We haven't had an issue like this since 2008, when the economy changed and our clients wanted to renegotiate contracts to pay half of what they were being charged because they had to stay in business. That was difficult - but it was the economy. This is greed on Marriott's part - all-out greed.
Why do you consider this greed, rather than a reasonable business decision?
Marriott is saying they can't afford to pay 10 percent. But meanwhile their stock price has gone from $14 per share in 2008 to $147 per share today. On top of that, they just got a giant federal tax break.
It's not like we're in a bad economy where they actually are hurting. I mean, the industry has never been better. They're a Goliath, and they're trying to control the marketplace. It's only because the economy is so good and their business is so good that they can pull this kind of action against the third-party market. If the market went sour right now, it would fail dramatically.
It's also interesting to me that this is only for properties in Canada and the U.S., not Europe or the rest of the world. That's because they don't have the same kind of market share internationally. They are not that big in the world.
Are commissions your company's only source of revenue?
Yes, we have 32 years of doing business fully commissionable. We are not a site selector like ConferenceDirect and HelmsBriscoe. We are a full-service meeting management company - that is the big difference here. It's odd to me that three of the four major companies that are not being affected right off are site-selection companies, whereas in my case, I handle the whole meeting and my only payment is hotel commissions. I would literally lose money by booking a Marriott for a client at this point.
Would it be unethical to avoid booking Marriott properties as a result of reduced commissions?
No. What kills me here is when you bring a piece of business to a Marriott or any other chain property, they look at the viability or the quality of the money they might make if they take that group. And that's OK; it's totally ethical. Then the revenue manager looks at it again and decides if it's a piece of business that is viable for their hotel - again, totally ethical. However, a third party looks at two different hotels next to each other, and both hotels are equal in quality and price, but we are unethical if we take the hotel that gives us the 10 percent commission vs. the 7 percent.
Do you expect other chains to follow suit?
We have not heard yet that anybody else is following. This is a windfall for all other chains. I consider this to be a red-letter day for every other chain that's out there. If you ever wanted to have a clear distinction between the hotel brands, this is it.
Anyone who follows the pied piper will be following them down a very slippery slope. What reasoning would they have to do that? It doesn't make sense to me that they would want to do that. Right now they have an advantage over a Marriott just for doing nothing at all.
Why did you form this group?
You've got four big companies getting preferential treatment over the rest of the industry, whether that is until the end of this year, or those agreements will be renewed after that. They can prove the volume of meetings they book, but somebody has to speak for the true meeting planner. We need to get as many people as we can to join the Meeting Planners Unite LinkedIn group so that, down the road, we can put together numbers of what we're doing as a group.
Those four companies give Marriott a lot of business. However, if you look at the sum total of all the other meeting planning companies added together, our numbers would easily justify the same treatment - or better. Once we get our numbers put together, we can go to Marriott and say, "Look at all the business you're missing from our group."
Will Marriott be losing your business?
In many cases, yes. I'm going to have to go to my clients and say, "If you choose the Marriott, you will need to subsidize the 3 percent of the commission we would have collected if you had chosen the Hyatt.
For a small association, that's going to be difficult to do, and they are either going to go it alone and plan the meeting themselves, or say sure, let's go to the Hyatt, or to the Hilton, or to an independent property, or Omni or IHG. Marriott is going to be left on the sidelines.
Thirty percent is a huge drop in income for a third-party planner - or for anybody for that matter. Imagine if I were to go to Marriott's sales team and say, "You need to sell the same amount as you're selling right now, and we're going to pay you 30 percent less."
How has the broader meetings industry responded?
What bothers me most of all is that the leading association in our industry was founded as Meeting Planners International. MPI was formed for the betterment of meeting planners. And their response to this has been lukewarm at best. That statement wasn't worth the paper it was written on. For an industry association to not stand up for the members it was founded for is sad at best.
What are your Marriott sales reps saying to you?
They are 100 percent unhappy. Everyone I talk to is feeling the same way. I have already informed my national rep that as of April 1, we will no longer be going through the national sales for any Marriott booking. We will go directly to the property.
What will that achieve?
Well, we have got to have some response, and I don't feel that going through the national sales office - which gets paid for every room they are booking to the hotel - is in my best interest of my clients. I can actually get to those hotels faster myself than if I go through a national sales office.
Do you think sales reps will offer additional concessions to compensate?
I'm not so sure that any savings offered to the group would affect the third-party planner. Because Marriott corporate pays commission directly for all the corporate-owned properties, they're going to be watching that 7 percent like a hawk. And I do not see that corporate Marriott properties will make any adjustment for the betterment for the third-party planner. The franchise properties could possibly come up with some kind of "signing bonus" or some other avenue by which they're going to even the score with the other hotel chains.
Some properties are actually raising their commissions now. I have learned that one hotel management company will be announcing a higher commission rate this week. This is the perfect opportunity for them to gain market share.
Do you think your efforts will have any impact on Marriott's decision?
I can't even imagine the damage that Marriott could do if we allow this to happen. Thirty-two years ago I was one of the first companies to get commission from anybody. And to see the growth since then… Why do you think Marriott has grown? It's because of people like us who have given them millions and billions of dollars in meetings throughout the years.
They have to remember that it is a finder's fee for people who have brought them the business. They didn't have to work at it, they didn't have to put salespeople on it, it was done for them.
All this could stop right now if the Big Four were to say that they are not supporting this movement, and join our movement, and unite with the other third parties across the country.
I believe if JW and Alice Marriott were alive today they would stomp this into the ground, because they believed you take care of the client and the client takes care of you. Marriott used to be the company that always said "yes" before they said "no," and "What can we do for you" before "What are you going to do for us?"
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