Hyatt Deliberates Commission Cuts to Planners

Hyatt Hotels Corporation is viewing the overall, long-term financial impacts as it decides whether to cut its commissions paid to third-party planners for North America group bookings, which Marriott and Hilton already have decided to do.

“There’s an economic reality,” said Hyatt CEO Mark Hoplamazian in an interview with Travel Weekly at the World Travel & Tourism Council Global Summit in Buenos Aires, which ended yesterday. “The issue for us is not to just treat it as a cost issue and say we’ll follow it because it will have a reduction in this line item on our P & L. We are thinking about it more holistically. What is the whole value equation? What is the net bottom line result of how we go to market? That may or may not look like what Hilton and Marriott have done.”

Marriott cut commissions paid on North America group bookings on all its brands from 10 to 7 percent at the end of March. Hilton announced that it will do the same on Oct. 1, but still is paying 10 percent commissions until then.

Group bookings account for 40 percent of Hyatt’s total rooms revenue. Hoplamazian said that group bookings are a “big and important piece of the puzzle” for the company, and that meeting planners are “really important partners.”

Rather than simply focus on the cost of delivery, Hyatt will be looking at the total net impact of the revenues being generated in determining whether or not to cut commissions, he said.

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