by: Don Urbahn
Vice President Sales and Revenue Management
At the recent Hotel Data Conference in Nashville, I participated in a panel discussing current trends and issues in group sales.
Top on everyone’s mind was the decision by Hilton, Marriott and IHG to reduce commissions paid to group intermediaries from 10 to seven percent. The recent uptick in advance bookings is clearly the result of companies looking to book business before the commission changes goes into effect, which likely means there will be a corresponding slump in bookings after the first of the year.
There is much discussion on both sides of this with intermediaries forecasting the end of life as we know it, and GMs clicking their heels over the prospect of paying less in commissions.
On balance, I think the change will be good for hotels.
As a sales person, I’m a little concerned that third parties may try to shift business to other brands or independent hotels paying a higher commission. But, it’s important to keep in mind that the client is the decision maker, not the intermediary, and most meeting planners still see value in the industry’s three best-known brands.
Here’s the challenge. Intermediaries are going to have to book 30 percent more business, just to maintain revenue. That can be good news for hotels, if they go find new business. However, if they steal share from hotels’ direct bookings, that’s another story entirely.
Group intermediaries are getting aggressive about wooing meeting planners to make up for that 30 percent revenue drop. So, just as smart hoteliers try to capture transient guests who book through OTAs and make them their own, right now, smart DOSs should be working hard to solidify their client relationships and nail down their own direct bookings.
While we appreciate every single room night, regardless of the source, we can do our best as hoteliers when we own the guest relationship, and make sure our own sales people are making money.