Marriott Commission Cuts Receive Heavy Criticism From Industry Leaders

The American Society of Travel Agents (ASTA), Virtuoso, Signature Travel Network and Travel Leaders Group have all weighed in with criticism on Marriott’s decision to cut commissions on group bookings at its U.S. and Canada properties. Many of the agency groups Luxury Travel Advisor spoke with are also working to assess the new policy’s impact on their member businesses.

“It is unfortunate that Marriott has failed to recognize the tremendous value travel agents bring to group bookings and has instead chosen to view their agent partners as just another expense item,” says Michael Heflin, senior vice president, hotels, at Travel Leaders Group. “Our agents have built an array of great relationships with individual properties, and we and they understand that this decision was not made by individual hoteliers.”

“While we are in the process of assessing the impact of Marriott’s announcement on our members’ businesses, we are disappointed in the signal that a cut of this magnitude sends to the broader agency community,” agrees Zane Kerby, ASTA president and CEO. “Travelers – individuals and groups, corporate and leisure – are relying now more than ever on trusted agents to help them sort through a multitude of travel options and get the best value for their travel dollar. In our view, a 30 percent cut in intermediary compensation diminishes the value of the role agents play in this complex and ever-changing industry.”

Kerby said that ASTA plans to discuss the change with Marriott, as well as ASTA’s agency and consortia members.

“Virtuoso shares ASTA’s concerns over Marriott’s decision to cut commissions and the perceived diminishment of the travel advisor’s value that it signifies,” says Virtuoso Chairman and CEO Matthew D. Upchurch. “It’s our position that the conventional understanding of an intermediary needs to be redefined for today’s travel landscape. We have reached out to Marriott, a longstanding Virtuoso partner, to better understand their decision and what it will mean for our members.”

“Group intermediaries serve an important role in delivering value and customer satisfaction,” says Richard Lebowitz, senior vice president, hotel and resort program, at Signature Travel Network. “In concert with ASTA, we are assessing the impact of a 30 percent cut in group commissions on our members businesses.”

Heflin noted that travel advisors’ decision on where to book groups is most often made at the individual property level, based on what is best for their clients. At the same time, he said that Travel Leaders strongly believes advisors should be fairly compensated for their investment of time, energy, resources and the valuable guidance they provide their clients.

“We will continue to firmly advocate for appropriate group commissions within the industry,” Heflin said. “We will also continue to provide our agents with insights and information on those hotel partners, at both the brand and property level, who actively support our travel agents and fairly compensate them for the group bookings that they deliver.”

When asked for further comment on the new policy by Luxury Travel Advisor, a spokesperson for Marriott responded that meetings and events represent a critical part of the hotel company’s business.

“The current business model and environment, however, present significant obstacles to making the investments needed to deliver a world-class experience for customers,” Marriott said. “ 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.”

Marriott said that the commission cut would “strike a balance and ensure the long-term health of our business.”

The new policy, announced yesterday in a letter to Marriott’s group partners, reduces commissions paid to group intermediaries from 10 percent to 7 percent for all properties in the U.S. and Canada, effective March 31, 2018. The new policy comes a little over one year after Marriott’s mega-merger with Starwood Hotels & Resorts, making it the largest hotel company in the world. The newly combined business represents 30 brands, including major luxury players like Bulgari, Ritz-Carlton, St. Regis, The Luxury Collection and more, as well as 5,700 properties worldwide.

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