Virtuoso, Travel Industry Leaders React to Hilton Commission Cuts

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Virtuoso and other travel industry leaders have weighed in with sharp criticism regarding Hilton’s decision, announced Friday, to cut group commissions at its properties in the United States and Canada. 

The change to Hilton’s group commissions policy, which is effective October 1, will see commission levels fall to 7 percent for bookings at the company’s hotels in the United States and Canada. All existing businesses booked before October 1 will be honored at the previously contracted commission rate. The move is similar to Marriott International’s decision to cut group commissions at its U.S. and Canada properties from 10 percent to 7 percent. That change, which was announced back in January, will take effect March 31.

“We have had numerous productive discussions with Marriott as well as others within the industry regarding commissions and the definition of intermediaries,” said Matthew D. Upchurch, chairman and CEO of Virtuoso, pointing to the difference between travel advisors and other types of intermediaries in the travel industry. “The practices and business models of players in the meetings sector are different from ours; we feel we are aligned with hotels' distribution strategy and expect more nuance in the application of commercial terms like these. Just this week at our Symposium in Amsterdam we stated that our model of collaboration should be considered part of any supplier’s Direct Consumer strategy – we are an extension of their salesforce and not a go-between.”

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In a statement provided to Luxury Travel Advisor, American Society of Travel Agents (ASTA) President and CEO Zane Kerby said: “At a time when consumer usage of travel agents and advisors is on the rise and awareness of the irreplaceable role that agents play in the travel industry is growing, it is disappointing to see supplier partners moving in the opposite direction and devaluing their relationship with our members. As the national trade association for travel agents, we are committed to defending and sustaining that role and intend to spotlight suppliers whose business practices recognize agents’ value, to raise concerns as appropriate with governmental stakeholders about the impact of supplier consolidation, and to otherwise give our members the tools they need to thrive in this complex and ever-changing industry.”

“It is disheartening that Hilton has made this decision which reflects a lack of understanding of the value provided by travel agents who work so hard to support their business,” agreed Michael Heflin, SVP hotels for Travel Leaders Group. “Our longstanding relationship with Hilton has been built on a foundation of great partnerships with individual business leaders at key properties around the world. We will continue to foster these relationships and look for those properties to continue to support our agents with fair market commissions.”

Heflin took issue with Hilton’s stated reasoning for the commission cut, which the hotel company said was made necessary due to “growing distribution costs.” “Travel Leaders Group does not believe these ‘growing costs’ are attributable to commissions, since commissions have held steady at 10 percent for years,” Heflin said.

Heflin said that Travel Leaders would continue to advocate for the commission levels that travel agents deserve, and to counsel member agents on hotel partners that actively support and fairly compensate them. 

This story originally appeared on www.travelagentcentral.com.

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