2018 Year in Review: Third-Party Planner Commission Cuts
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2018 Year in Review: Third-Party Planner Commission Cuts

By Michael Pinchera | Dec 5, 2018

Don’t Panic
By Howard Givner - March 2018

From an announcement in January with an abrupt rollout (Marriott International) that brought comparisons to that of U.S. President Trump’s sloppy travel ban to the perception of kickbacks, the 30 percent commission cuts (down to 7 percent) hitting third-party planners throughout 2018 have brought into the headlines myriad issues the industry and professionals working in it need to resolve.

As Hilton Worldwide and IHG followed Marriott’s lead (and some smaller hospitality groups responded with increased commission offers), the most important facet seems to be how to help these planner professionals change their business plans to enable a successful future.

In “Don’t Panic,” Howard Givner calmly and logically spelled out the situation: “There are numerous ways to charge for event services: flat fee, hourly rate, day rate, markup, percentage of budget, commission, etc. Each has its own pros, cons and best practices. How clients pay you shouldn’t matter; what’s important is being clear about how much you charge, and why you’re worth it. In other words: your value proposition.”

If you always make clear your value proposition, this commission change shouldn’t be the end of the world, he said. For those professionals, a shift from the commission model may make the most sense.

“Marriott’s move should catalyze meeting and event planners to shift to billing the client directly, following many commission-based fields. Stockbrokers (now called financial advisors), for example, primarily used to make money off of commissions from trades, but that proved unpredictable, in addition to calling into question the integrity of advocating constant trading when ‘buy and hold’ was often the best strategy for their clients. Their compensation model has shifted to billing the client a percentage of assets under management, which is more transparent, offers steadier income and is probably more lucrative as well.”

The concluding tips Givner provided remain valid and worth consideration for all professionals—whether directly impacted by the commission cuts or not.

  1. Stay calm. A number of industry leaders have rightly said it’s worth taking a step back and not panicking. While definitely a problem, the commission cut could’ve been worse. It could’ve been 5 percent.

  2. Talk to your clients. The silver lining in Marriott’s botched rollout is that this is front-page news, creating an opening for agencies to start a frank conversation with their clients about pricing and value.

  3. Plan to shift your business model away from commissions. Unless you want to be on the commission roller coaster, make plans to move away from commissions and toward a transparent, fee-based model billed directly to your end-user clients.

MPI Education Offerings for/Engagement with 3rd-Party Planners

To aid independent and third-party planners, the MPI Academy has increased its focus on education for this important niche in the industry. Following are some of the opportunities—all free to MPI members—that professionals can take advantage of to help ensure a successful future. Visit www.mpi.org/academy.

Webinars

On-Demand Education


The 2018 Year in Review is sponsored by Mohegan Sun.
 

Author

michael-pinchera
Michael Pinchera

Michael Pinchera is an award-winning writer and editor for The Meeting Professional as well as a speaker, technologist and contributor to business, academic and pop culture publications since 1997. Read more of his work at www.whatmemeworry.com.