Will Travel Agents Support Hotels that Support Them?
by Jessica Montevago /
Several lodging companies, such as Loews Hotels & Co, have come out in support of their industry partners, reaffirming they have no plans to change their relationship with intermediaries, in light of recent changes to advisor commissions made by some major hotel chains.
In an email to third-party partners, Loews CEO and Chairman Jonathan Tisch said the company’s commission structure will remain unchanged at 10 percent.
“We know our industry continues to evolve and consolidate, and pressure to deliver strong results is stronger than ever… The business you bring into our hotels continues to be a top priority for us,” he said in the letter.
|
Additionally, in 2019, some of Loews’ newest hotels will be offering 13 percent commission: Loews Hollywood, Loews New Orleans, Live! by Loews – Arlington (opening summer 2019) and Loews Kansas City (opening spring 2020). Bookings must be made by Mar. 31, 2019 with travel by Dec. 31, 2019; and Dec. 31, 2020 for Loews Kansas City.
Last year, Dream Hotel Group began offering 12 percent commission to group intermediaries through the end of the year. According to a spokesperson for the company, the response was so positive that they are extending the increased commission of 12 percent through the first quarter of 2019.
The news comes as Hyatt recently announced it will become the latest major hotel company to reduce commissions from 10 to seven percent for third parties booking group business at hotels in the U.S., effective Feb. 1, 2019. Marriott and Hilton cut intermediary compensation by 30 percent this year, in March and October, respectively. InterContinental Hotels Group will begin its new policy on Jan. 1, 2019.
In times of crisis, hoteliers rely on agents
The strength in partnership between meeting planners and hotels was proven nearly a decade ago. During the recession in 2009, the meetings industry revenue was at an historic low point. Following the government bailout, banks were more scrutinized for their lavish spending, causing Goldman Sachs to call off its million-dollar hedge fund conference at the Fairmont Turnberry Island Resort & Club in Miami. It started a trend, and other banks and companies followed suit in fear of public backlash, canceling in-person meetings and conferences left and right.
It was a huge hit to the meeting and events business at hotels across the board, and they reached out to the agency community to help increase group space bookings and move share.
The meeting and event industry contributed about $330 billion annually to the economy in the U.S. in 2016, according to Meetings Mean Business, a U.S.-based coalition. There were 1.9 million meetings nationwide in 2016, representing 10 percent growth relative to 2012.
Will it make a difference in business?
The question that remains is will travel advisors and meeting planners booking groups be more inclined to include those hotels with more compensation in their requests for proposals? If all else is equal, amenities, meeting space, location, would you recommend a property with a friendlier group booking commission policy?
Geoff Millar, co-owner of Ultimate All Inclusive Travel Inc. in Gilbert, Arizona, said because of cutting commissions, “We very rarely book directly with the hotel or resort … and also we tend to get better support from the supplier.” The commissions they pay to agents normally range from 10 to 16 percent, and the amount is based on the volume of business the agent does with that supplier.
As many hotels and resorts are encouraging booking direct as pushback against the large OTAs, travel agents get caught in the middle, because of the unique promotions a hotel or resort will offer as a byproduct, Millar said.
“This is why, I always say, travel agents do not sell travel. Clients can buy travel in hundreds of places. The main product we sell is our knowledge, experience, and service. We then provide travel.”