Effective March 31, 2018, Marriott International will reduce commissions paid to group intermediaries from 10 percent to 7 percent for all properties in the U.S. and Canada.
That was the news many in the industry got today in a letter from Marriott’s senior vice president of global sales, Tammy Routh, which was distributed electronically to its “group partners.”
Though the new strategy affects just a specific piece of the travel industry, one would wonder what could be next as Marriott assesses the sheer mass of its hospitality inventory. It is now the largest hotel company in the world, following its merger with Starwood Hotels & Resorts in September 2016. The “new” Marriott now comprises 30 brands and more than 5,700 properties globally.
Since the merger, Marriott has made major internal moves to synergize talent, sales and marketing from Starwood. This outward move aimed at third parties booking groups in its hotels could be just the first direct jab at intermediaries.
In explaining the reasoning for the commission cuts, Routh’s letter said that, “Marriott’s group distribution costs are growing faster than our group revenue; these costs are limiting our ability to invest in meeting products, experiences, and innovation. Changing economics in this segment, plus these growing costs, required us to reevaluate our intermediary compensation model. We are introducing a new strategy that will result in a more sustainable way of partnering with intermediaries.”
“Those contracts signed prior to the March 31 effective date will be eligible for 10 percent commission,” the letter continued. “This policy applies to group intermediaries globally when they are sourcing business to hotels in the U.S. and Canada. Commissions for our hotels outside the U.S. and Canada remain at 10 percent,” Routh said in the letter.
Marriott’s Meeting Programs
The letter also included a round-up of Marriott’s meetings offerings, which include Marriott’s Convention & Resort Network, “a collection of 100+ of the largest convention and resort hotels across The Americas” and “Meetings Excellence!,” an online training program whose graduates receive discounted rates at certain Marriott properties.
The letter also noted that Marriott is the first lodging company to centralize group intermediary commission payments and that that program’s policy is to pay commissions 45 days after an event ends. Marriott also has a group intermediary website and a centralized group support desk.
“We are committed to working together in support of the best interests of our mutual customers. We share the same goal – to provide customers with the best hotel solution and value for their meetings. We value your business and continued partnership,” Routh’s letter concluded.
Marriott International’s 30 brands include: Bulgari Hotels and Resorts, The Ritz-Carlton and The Ritz-Carlton Reserve, St. Regis, W, EDITION, JW Marriott, The Luxury Collection, Marriott Hotels, Westin, Le Méridien, Renaissance Hotels, Sheraton, Delta Hotels by Marriott, Marriott Executive Apartments, Marriott Vacation Club, Autograph Collection Hotels, Tribute Portfolio, Design Hotels, Gaylord Hotels, Courtyard, Four Points by Sheraton, SpringHill Suites, Fairfield Inn & Suites, Residence Inn, TownePlace Suites, AC Hotels by Marriott, Aloft, Element, Moxy Hotels, and Protea Hotels by Marriott. The company also operates loyalty programs: Marriott Rewards, which includes The Ritz-Carlton Rewards, and Starwood Preferred Guest.