News

January 2018

Past Travel Agent Commission Cuts Mirror Third-Party Planner Plight

by Tyler Davidson

Tyler Davidson, Chief Content Director, Meetings Today

Tyler Davidson, Chief Content Director, Meetings Today

With news of Marriott International’s decision to cut third-party planner commissions for bookings at U.S. and Canadian properties to 7 percent from 10 percent starting March 31, 2018, a seeming parallel event stood out in my mind from near the beginning of my travel trade journalism career.

In 1995 I was working as an editor at TravelAge and Travel Weekly magazines and news of airlines capping travel agents’ commissions roiled the industry in an even larger way than the recent Marriott news appears to be roiling third-party planners.

To up the outrage meter regarding the current news, it was soon discovered that Marriott kept the commission rate intact for the large third-party planning companies: HelmsBriscoe, HPN Global, ConferenceDirect and Maritz Global Events.

The editor-in-chief of TravelAge at the time, Robert Carlsen—who currently does some freelance work for Meetings Today, because it’s generally a good strategy to surround oneself with people who are smarter than you—led the charge in covering the momentous news, which was the biggest issue to impact the travel agent industry since the deregulation of U.S. airlines in 1978.

Here’s Carlsen’s take:

“As we reported in TravelAge West at the time, Delta was the first major carrier to cap travel agent commission to $50 domestic and $100 international in 1995, with all the other large carriers (United, American, Northwest, et al) following suit by 1996—the main reason cited as the rise of low-cost carriers such as Southwest,” Carlsen said in response to Meetings Today’s query about how the Marriott third-party commission cuts reflected the travel agent commission caps of yesteryear. “In 1999, the carriers dropped commissions to a flat 5 percent and then in 2002 eliminated them altogether.

“Travel agents, obviously, were stunned, but they eventually realized that they could use service fees to regain some revenue while actively promoting customer service, which today is still an effective plan based on online booking uncertainties and rip-offs,” he added.

How will Marriott’s commission cuts impact the meetings industry? Will other major chains join in?

As the saying goes, time will tell.

It seems the writing could be on the wall, however, for the current business model.

One eternal lesson to keep firmly in mind is to focus on customer service and demonstrate the “return on investment” you bring to your clients. While you may vehemently disagree with the Marriott decision, proving your value to your clients is always sure to be the best strategy to stay in business.

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