It’s been just over a year since Marriott made its move, the first in a wave of such measures. But instead of getting knocked down by the trend, independent meeting planners are finding ways to take control of their businesses.
When Marriott slashed third-party planner commissions from 10 percent to 7 percent last year—and Hilton, Intercontinental and Hyatt all followed suit—independent meeting planners seemed to feel under attack.
“This has been damaging,” David Bruce, managing director of CMP Meeting Services, and founder and executive director of the Alliance of Independent Meeting Professionals, declared to Skift. “We can’t stay in business if we take a 30 percent hit.”
He continued, “Last year probably cost me somewhere around $40,000, and I’m assuming this year it’s going to be $60,000 or more. A lot of agencies can’t take that.”
But rather than go out of business, meeting planners have been finding creative ways to cope. “It doesn’t do any good to get mad or upset, you just have to think about how we’ll replace the revenue,” said independent planner Alex Doyle, vice president of meetings and events for 21st Century Group. “You have to look at what you do through a different lens and evaluate where the value is and who’s looking for it.”
He is evaluating strategies to recoup the loss and, in the meantime, is setting the stage with clients for a possible rate hike or even to start contracting with clients to share the results of the savings negotiated by 21st Century. “We’re really emphasizing the added value we bring to the customer, such as securing discounts on audiovisual or F&B or arranging rebates to their master account, because at some point in time, we’ll have to address compensation.
“In our communication with clients, we list upgrades, discounts, or other benefits we secured, and quantify all those things. Now the time is right for us to do that.”
He also is looking to offset the loss by hiring more sales representatives. “We were already looking at this but the commission cuts moved the timetable up for us. We need to add to the top line revenue.”
Third-party planner Jeff Berger, chief thinking officer at Conference Planning Resources, anticipated the cuts after travel managers saw their commissions cut some years back, and has been providing meeting owners with a slew of other services through partnerships with outside providers of audiovisual services, meeting registration help, or just about any other good or service meeting owners need, and earning commissions from those organizations.
Given the commission cuts, he said “Just doing site selection isn’t a good position to be in. “We now market ourselves as a full-service provider and, as a result, we’ve definitely seen an uptick in referrals.”
The Alliance of Independent Meeting Professionals, which was formed in response to the commission cuts, is enlisting the help of convention and visitors bureaus to make up the revenue difference either with discounts, added services or, as Birmingham, Ala., is offering, a 3 percent commission, said Bruce. “We have 14 bureau members of our association, and many of them are offering special incentives to the independent meeting planning members to entice them to push business to their cities.”
Of course, meeting buyers have other venue choices, and they’re partaking more with some of the smaller brands.
“If all things are equal between a hotel offering seven percent commission and one with 10 percent and a client has asked me which one would I chose, then I tell them the situation. Every single time they’ve said, ‘Forget [the lower commission property], go book XYZ that’s paying you 10 percent,’” said Berger.
Added Bruce, “My clients have said, ‘We don’t believe this is healthy for you, and we’re partners.’ They understand that the name on the wall doesn’t connote the amount of quality there.”
All of the planners Skift spoke to still bring business to the ‘offending’ brands when that’s best for their clients. But no longer are these buyers heading to the properties of those companies by choice.
“We’ve always fostered a partnership with all of the suppliers we work with but it’s not as robust now,” said Doyle. “We’re still cordial, but we’re not as giddy about working with them as we were previously.”
Photo credit: More than 1,000 mayors, managers, community planners, local officials and guests from throughout Michigan had been expected to descend on Grand Rapids, Michigan, Sept. 20-22 for the joint 2018 Michigan Municipal League and Michigan Association of Planning convention. Michigan Municipal League / Flickr