70% of Travel Agents Say Marriott Commission Cuts Will Hurt Bottom Line

(Chart by TravelAgentCentral.com)

Over 70 percent of travel agents polled on our website said that Marriott’s cuts to group commissions would hurt their bottom line. Marriott announced the new policy last week in a letter to its group partners, saying that it would reduce group commissions at its properties in the United States and Canada from 10 percent to 7 percent, effective March 31.

In our poll, which asked, “Will Marriott’s Group Commission Cuts Hurt Your Bottom Line,” 50 percent of agents responded “Yes, a lot.” 21 percent responded “Yes, a little,” for a total of 71 percent overall “yes” votes. Only 18 percent responded “Not much.”

Of the 11 percent who answered “Other,” every respondent indicated that they either had already stopped booking Marriott brands or planned on moving business away from the company, meaning that the cuts wouldn’t impact their bottom line.

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Certain third-party business could maintain their 10 percent commission level even after March 31, according to a tip from one of our readers. Marriott confirmed that it was “honoring existing contracts,” which could mean that companies with contracts specifying a 10 percent commission level would continue to receive that commission as long as the contract was valid.

The policy shift has garnered strong push back from travel industry leaders, including the American Society of Travel Agents (ASTA), Travel Leaders Group, Virtuoso, Signature Travel Network and Ensemble Travel Group, many of whom said that the commission reduction downplays the valuable role travel agents play in the group booking process. Other agents noted the timing of the decision, which comes not long after Marriott’s mega-merger with Starwood Hotels & Resorts Worldwide, making it the largest hotel company in the world.

Marriott claims that the policy was necessary because costs for the company’s North American hotels and owners are growing faster than group revenue, impacting hotel profitability.

“At Marriott International, meetings and events represent a critical part of our business as well as an opportunity to drive innovation and win with customers,” the company said in a statement provided to Travel Agent. “The current business model and environment, however, present significant obstacles to making the investments needed to deliver a world-class experience for customers.”

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