Hyatt Hotels Corporation will join Marriott International, Hilton Hotels & Resorts and InterContinental Hotels Group (IHG) in cutting independent meeting planner commissions from its current 10 percent rate to 7 percent.
In a letter sent November 15, 2018, Jack Horne, global head of sales and revenue for the Chicago-based hotel chain, told recipients the following:
“We have carefully evaluated our commissions structure to ensure it meets the needs of our constituents and remains competitive in the market. As an outcome, effective February 1, 2019, Hyatt will move to seven percent commissions for intermediaries booking group business at hotels in the U.S.”
The chain said its current commissions model will still apply for all business signed prior to February 1.
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Independent planning company owner David Bruce, who heads up Meeting Planners Unite—an association for independent meeting planners formed in the wake of the Marriott International commission cuts in early 2018—provided the following statement to Meetings Today after the announcement from Hyatt.
“Again we are dealing with a hotel chain that is following the goliath,” Bruce said. “Foolish is someone who believes following the leader will result in more business at the hotel level. Why would any chain feel that dropping to 7 percent is in the best interest of the hotel, the client or the independent?
"The biggest question is if [the drop in commission] is mandatory for every property," he added. "[For] Marriott [the commission cut] is mandatory. But Hilton, IHG and Hyatt? That is the new million-dollar question…
“Meeting Planners Unite has discussions with each chain to provide a program for the independents which add a value add to our groups,” Bruce continued. “We will be discussing this at length at our December conference in Washington, D.C. We will continue to push those properties who have continued the 10 percent (or more).”
A New Business Model for Independent Planners
Independent planning business strategy expert Eric Rozenberg, president and CEO of Event Business Formula, sees the move as the expected, inevitable march to cut commissions, and said that independent planners need to adjust their business models to adapt to a rapidly chaning landscape.
"Is it a good news? No. Surprising? Not at all," Rozenberg said.
"I’m actually convinced that the major hotel companies are not going to stop at 7 percent in the coming years," he added. "I feel for the independent planners who are relying 100 percent on hotel commissions and I believe that those who will thrive are those who will look at expanding their services, change the way they charge their clients, position themselves differently and find new customers.
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"When I had my own agency, I never counted on hotel commissions to make my budget," Rozenberg said. "It was back to the clients or put in a special 'success fees' pot which was distributed based on pre-agreed KPI’s.
"So, there is a way," he continued. "This is a business decision Hyatt is taking. Just like with Marriott or Hilton, independent planners are directly affected. It is not an easy situation. Change is not easy and the sooner independent planners acknowledge it and act upon it, the better their future will be."
Additional Hyatt Response to Meetings Today
After the publication of this article, a Hyatt spokesperson responded to Meetings Today's request for comment:
Hyatt will be reducing commissions for third parties booking group business at hotels in the U.S. to seven percent, effective February 1, 2019. We did not arrive at this decision easily—and is in line with the industry as whole.
Intermediaries are important partners for Hyatt and we understand the value they bring to our organization as well as to their customers. We remain committed to closely collaborating with meeting planners and travel agents to deliver meaningful experiences and foster shared success.
This change will not affect business booked prior to February 1, 2019, even if the event occurs after that date.
View the original letter sent from Hyatt announcing the commission cut here.