InterContinental Hotels Group (IHG) joined Marriott International and Hilton Worldwide in cutting third-party planner commissions to 7 percent, from the traditional 10 percent, at properties in the U.S. and Canada.
IHG, which operates brands that include InterContinental Hotels & Resorts, Kimpton Hotels & Restaurants, Holiday Inn and Crowne Plaza Hotels & Resorts is encouraging its franchise hotels to do the same.
"Effective January 1, 2019, sales commissions paid to global group travel partners will be reduced from 10 to 7 percent for bookings made at all IHG hotels in the U.S. and Canada," said Derek DeCross, SVP, global sales, InterContinental Hotels Group. "This move allows us to balance the needs of our guests and owners by reinvesting the savings into programs and improvements that will benefit the guest experience."
David Bruce, founder and executive director of Meeting Planners Unite, a newly formed association that was launched to combat the Marriott commission cuts, said that the move by IHG, and the expectation that another shoe will drop as Hyatt Hotels Corporation may join the major chains cutting commissions, is a pure profit grab.
"It is becoming increasingly more difficult to understand the logic in lowering the commission by these chains other than it is an attempt to increase their profit structure by cutting commission to those who bring them 60 percent of their business," Bruce said.
"As you can see, the hotels for the most part, are not disrupting the commissions of the OTAs [online travel agencies], which they pay far higher rates than the 10 percent they pay to their largest block of business—who also keep food and beverage and other essential hotel income categories employed by our group business."
Following is an email announcing the change sent Tuesday, May 8, 2018:
Dear Valued Travel Partner:
I wanted to personally touch base with you in advance of some changes that IHG is making.
Ensuring that we deliver the right sales tools, programs and best-in-class experiences for our customers is always top of mind as we also continue to assess how we can best amplify our approach.
Understanding the complexities of the Groups & Meetings industry and the nature of the business being booked by our customers is an integral part of our sales strategy and foundational to what we do.
As part of this, IHG has assessed its group booking commission structure and will be changing the group travel partner commission structure as follows:
- Effective January 1, 2019, IHG’s Company-Managed hotels will reduce commissions paid to group travel partners from 10% to 7% for all Groups & Meetings business sourced to IHG hotels in the U.S. and Canada. For franchise hotels, IHG encourages them to follow the same.
- Contracts that IHG executes with group travel partners on or after January 1, 2019, will reference the 7% commission.
- Contracts signed prior to January 1, 2019, will still honor a 10% commission.
- Commissions for IHG hotels outside the U.S. and Canada will remain unchanged.
At IHG, we are focused on putting our customers’ needs at the heart of our near and long-term strategy in order to drive an optimal experience throughout the entire travel journey.
Whether that journey includes a corporate customer attending an incentive event, or a parent booking his or her son’s soccer team, we’re always thinking with them in mind.
And to achieve this, we’re investing. This investment isn’t 10 years away for IHG.
We’re delivering on our commitment now and within the next few years with key milestones on our long-term journey to meet our customers’ needs right where they are.
As a valued partner of IHG, I wanted to share this information with you as we will continue to explore opportunities to drive mutual value between our organizations, focused on delivering the best experience for our mutual customers. As always, thank you for your partnership.
Senior Vice President, Global Sales
Bruce added that he hopes IHG franchise owners will opt to not cut commissions, as is their prerogative.
"Again, InterContinental, as with Hilton, have left the door open for their franchise properties to make individualized decisions which are in the best interest of the franchise and property owner," Bruce said.
"We believe that these properties, when faced with the decision to either keep the 10 percent or lose the business, will choose the higher commission option," he added.
"More than ever it is important to continue our development of the Meeting Planners Unite Association so that we can work towards a solution which is equitable to all involved. Once our membership grows to our current LinkedIn/Facebook levels we will ask that each chain speak to us individually to negotiate our own options."