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From the Editor: Commissions - It’s Complicated

Commissions: It’s Complicated

The New Year was not yet a month old when Armageddon—that place where the last battle between good and evil will be fought—was declared in the meeting and event industry.

Marriott International, the largest hotel company in the world, threw down the gauntlet by announcing it planned to cut commissions paid to third-party meeting planners by 30 percent at the beginning of the second quarter this year.

“The current business model and environment …” Marriott said in a statement, “present significant obstacles to making the investments needed to deliver a world-class experience for customers. While group intermediaries play an important role in the marketplace, costs for our North American hotels and owners are growing at a faster pace than group revenue, which impacts hotel profitability.”

To no one’s surprise, third-party planners revolted, leading to saber-rattling comments such as “a slap in the face,” “we are disappointed” and “it’s unfortunate when a hotel does not necessarily see the value of a third-party planner and their contracting influence.”

One planner, David Bruce, managing partner at CMP Meeting Services LP in Dallas, created a LinkedIn group called Meeting Planners Unite, and it quickly gained more than 600 followers.

Among those standing in the middle are Meeting Professionals International, which has more than 2,000 members who are third-party planners and is also a corporate partner with Marriott, and The Meeting Professional magazine, which is committed to balanced, impartial and transparent reporting on industry issues and has been on the receiving end of emails and phone calls from both sides.

I’m not going to tell you who’s right or wrong in this. That’s not a defense of Marriott, which has yet to speak more openly about its decision, and I certainly respect the passion of the third-party planners fighting for their livelihood.

What I will tell you is to read Howard Givner’s insightful perspective in this month’s issue. “Don’t Panic” is thoughtful, rational and looks at all sides. Givner is founder and executive director of the Event Leadership Institute and a former board member for the MPI Greater New York Chapter. He also frequently teaches and speaks at industry conferences on sales and business development, negotiations, innovation and entrepreneurship.

Givner suggests that “everyone step back and assess the damage and fix what many have said for a long time was a broken business model.” He pulls no punches when discussing the execution of Marriott’s announcement and says third-party planners have tough decisions to make in various aspects of how they do business. More change could be coming if other chains follow suit, and third-party planners need to be prepared.

I was able to connect with Marriott just before we went to press, sharing my desire to hear more about the decision. I’m hopeful that will happen in the days to come. In the meantime, Marriott referred me to a report from Business Travel News in which Brian King, global officer, digital, distribution, revenue management and global sales for Marriott, said the change is a “reset and rethink” moment for the company. The report says the policy may not have been a surprise to some as “fears that commissions would change have been growing the past three to four years, particularly in light of industry megamergers.”

“What led us to the decision was trying to balance [intermediaries, customers and owners] and make sure that we make a decision that made good sense for all. … And frankly, it also had to make good economic sense for the business overall," King said.

Paul Van Deventer, MPI president and CEO, issued a statement at the beginning of the brouhaha, reaffirming that MPI’s role is “ensuring the long-term and sustainable financial health of the events industry, and raising the professionalism of those who work in it.”

Now isn’t that something we can all agree on? Stay tuned.

Until next time …

Rich Luna
Editor in Chief
rluna@mpiweb.org

MPItv

www.themeetingprofessionaldigital.org

Watch MPItv videos in our digital edition to learn more about our reports “LEEDing the Way,” “General Data Protection Regulation: Are You Prepared?” and “A Collaborative Effort.”

 


About the Author

Rich
Rich Luna

Rich Luna is director of publishing for MPI and editor in chief of The Meeting Professional.