As many in the meetings industry predicted, Hilton Hotels & Resorts announced today that it will follow Marriott International in cutting commissions to third-party planners.
The company released a statement saying that the base group sales commission rate will be reduced from 10 percent to 7 percent for booking into “participating hotels” in the United States and Canada, effective October 1. It referenced “growing group distribution costs and the complexity of intermediary services.”
The statement, from Danny Hughes, Hilton senior vice president and commercial director for the Americas, said, “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.”
A follow-up query about whether Hilton would continue to pay large third-party sourcing companies at the old rate based on established contracts (as Marriott did with HelmsBriscoe, HPN Global and ConferenceDirect), received this response:
“At this time, the updated group commission rate structure applies to all new group business at participating hotels in the U.S. and Canada beginning October 1, 2018. Like any company, Hilton may have strategic partnerships and agreements with certain organizations, the details of which are confidential. Hilton continually reviews its sales and distribution strategies to ensure we are offering the best value for our customers, hotels and owners.”
David Bruce, founder of the independent planner group Meeting Planners Unite and managing partner of Dallas-based CMP Meeting Services, said he was surprised only by the timing. He guessed the second-largest hotel chain might wait to see if it would capture extra business after Marriott’s cut goes into effect April 1. He called the decision “an opportunity for some hotel brands to gain business and attract companies that haven’t visited them before.” Now, he acknowledged, “We are probably moving toward a new model whether we like it or not.”
He predicted that InterContinental Hotels Group could make a similar announcement as early as Monday.
Through Meeting Planners Unite, Bruce is looking for ways to develop new revenue streams for independents. One avenue could be via finder’s fees from nonhotel suppliers such as audiovisual, decorating, exhibit and transportation companies—and perhaps even destinations. “We will have to look at all angles to see where we can make a profit while still serving the needs of our clients,” he said. “We need to find a way to make up the three percent, so we can keep our doors open.”