In what may not be a surprise to some in the industry, Hilton announced today it would be reducing group booking commissions, following a similar move by Marriott earlier this year.
The new policy base group sales commission rate changed from 10 to 7 percent for bookings at hotels in the U.S. and Canada, effective Oct. 1, 2018. Group bookings made prior to this date will remain unaffected.
In a letter to travel agent partners, Danny Hughes, Hilton's senior vice president and commercial director, Americas, cited “growing group distribution costs and the complexity of intermediary services offered” as the driving force. “This change, whilst easing operations costs associated with group revenue, will allow our owners, over time, to make further investment in products and offerings that enhance the guest experience.”
“At Hilton, we recognize the important and integral role group intermediaries play in our meetings and events business, and we are proud to partner with a wide network of travel professionals to create meaningful experiences for our guests. At the same time, we also have to balance the needs of all parties, and we therefore continually review our sales and distribution strategies to ensure we are offering the best value for our customers, hotels and owners,” the memo said.
Many travel agents and other intermediaries expressed concern this would become a growing industry issue when Marriott International announced in January it would be reducing commissions on group bookings down to 7 percent for North American hotels.
“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," Zane Kerby, President and CEO of the American Society of Travel Agents (ASTA), said in a statement.
"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,” he said.
While several hotels chains TMR spoke with previously, including Omni Hotels & Resorts, Wyndham, and Preferred Hotels & Resorts, reaffirmed they had no plans to change their relationship with intermediaries, Hilton, as well as Hyatt Hotels, declined to comment.
Some meeting planners said they would direct their business to more trade-friendly brands, but with Hilton joining the ranks of Marriott, it could be hard to avoid bookings at the two largest hotel companies in the U.S. In addition to its flagship Hilton Hotels & Resorts brand, it also operates 13 brands including Waldorf Astoria Hotels & Resorts, Conrad Hotels & Resorts, and Curio Collection by Hilton.