Marriott made huge news to end January by axing third-party commissions down to seven percent from the standard 10 percent-a change that is effective this March.
In making the announcement, Marriott blamed "changing economics," saying that "group distribution costs are growing faster than our group revenue." The company went on to intimate that their ability to continue to offer quality products was dependant on this move.
Now, as the dust settles, it looks like pennywise Marriott was also pound foolish.
Agents, it seems are just going to move on. Immediately.
In fact, as the news broke that Marriott was cutting commissions, many in the travel agent community were finding out not from news sources, but from other hoteliers. Companies of all shapes and sizes were reaching out, seizing on the opportunity to woo advisors and planners spurned by Marriott's decision.
Marriott was ready for this, however, and news broke that they were hedging their bets.
The largest planners in Marriott's stable don't have to rue March 31; They will still be making 10 percent commissions for an indeterminate amount of time. However, that move is a double-edged sword for smaller agencies who are not only feeling stung from losing revenue but also by Marriott signaling loud and clear that they no longer matter as part of their business plan.
Mark Gerling, of Gerling Travel in Flagler Beach, Florida adjusted immediately.
"Numbers showed," Gerling said, "we would be losing around $30,000 in commissions if the cut was for current 2018 bookings-that does not include any new bookings. As a small travel company, this is a pretty big cut, and it's the same amount of work, as we're still going to service our dedicated and loyal clients. We will, however, strongly encourage our clients to consider other hotels that may suit their needs."
Gerling went on to say that his company is doing extra work to show clients non-Marriott options for their vacations while putting more emphasis on cruise and tour bookings in order to make up for lost revenue.
For a small business owner like Gerling and many travel agents, Marriott's decision is not only about padding the bottom line, but about jobs and livelihoods.
"We have," Gerling continued, "instructed all our agents-office-based and home-based-of the lack of partnership that Marriott has shown with this move, as well as the larger effects of potential customer service issues that may follow due to the group cuts they have made in-house. Why would we trust that the Marriott corporation has their own hotels' best interest in mind with so many cuts of employees on their group side of the business and now the commission cut?"
Miki Taylor, both of Taylor @ Co. Travel and travAlliancemedia, went even further; reminding us that these kinds of moves aren't new for Marriott, calling it yet another "slap to the face."
"It is reminiscent," Taylor said, "to when [Marriott] created member rates and then said that only select agencies would be receiving commissions on those rates. We book a lot of our corporate clients at Marriott properties, and I was upfront with all of them. I said wouldn't be booking that rate because we don't receive any commission on them."
Longtime agents know well that, for all the lipservice companies like Marriott pay to the travel agent community, business decisions like this continue to tell the true story and Marriott has long been leading the charge in the direct booking wars.
"One of the things we have done," Taylor continued, "was to never offer a Marriott property unless it is specifically requested for meetings or regular reservations. Some clients don't think twice about it, while others are die-hard Marriott travelers."
Taylor, too, reminded travel agents that there are always ways around commission rules: "A way to compensate when planning events-besides using properties other than a Marriott-is to offer the hotel a higher room rate in exchange for complimentary or lower meeting space rates (and, in some cases, even AV equipment)."
"We normally only receive commission on the sleeping rooms," Taylor continued. "So, this will raise the room night base providing additional commissions while still staying within your client's overall budget. We have always worked our meetings this way, and the clients don't mind as long as they stay within their overall budget for the meeting or event."
In the long run, only time will tell how the major hoteliers respond to Marriott's precedent-setting move. If the Hiltons and IHGs of the world stand their ground-in lockstep with the travel agents and planners who provide a tremendous share of their reveune-Marriott will be forced to come back to the table and reembrace partnering with agents.
Until then, agents are clearly moving on with options thanks to hoteliers big and small willing to partner with third parties in a way that benefits the entire travel industry.
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