Richard John stays ahead of the commission curve
You may recall I wrote about speaking to the HBAA last year on the topic of the commission model and whether it would survive in its current form.
And then did you see what happened? Marriott announced a reduction in commissions. Was that the end of it? Nope. In a move that could have surprised no-one, Hilton quietly followed suit.
Not everyone responded the same way; Warwick Hotels and Resorts started offering an extra 5% commission to meetings and incentives group professionals at properties throughout the United States and Bahamas.
All’s fair in love and war, and reducing commissions is inevitable in the face of intense competition, exacerbated by the myriad of intermediaries and agents wanting their share, and upstarts like Airbnb. Meanwhile the major hotel chains are constantly bringing out new sub-brands, as they hunt for new niches in the market.
People wiser than me have talked extensively about the concept of ‘disruption,’ when a start-up – whether it’s Facebook, Airbnb, Netflix, Alibaba or Uber – appear as if from nowhere to shake up a sector, and sometimes brings the apparently insurmountable market leaders crashing to the ground. The advent of new technologies – think Blockchain and the Internet of Things – may well have a similar effect.
Add pressure from clients who, while maybe understanding the need for commissions, may consider that a lower figure – perhaps 5% – is a perfectly fair amount to pay. And who may also be concerned when they are offered properties by agents which just happen to carry ‘enhanced’ commission payments.
Here’s another thought: a few years ago, the airline industry went through major changes in terms of paying commission, and we now have a short haul marketplace dominated by the likes of Ryanair, for whom paying commission is anathema. How long before a hotel sub-brand starts to play the same way, and deal only with the person paying the bills?
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