Room Block Commissions are a hot topic. With Marriott’s recent announcement that they will decrease standard room block commission by 3% beginning March 31, many are asking how it will impact their groups and businesses. In the US and Canada, a standard 10% commission is available for third-parties securing/managing room block contracts for groups. Typically, your company needs an IATA number to qualify. This 3% decrease is leading to a number of questions, conversations and challenges within the industry. Most importantly, how will this change impact my company and/or my group(s)?
Answer: We will all likely be impacted to some degree.
Tough conversations about room block commissions are coming soon
If you are a third-party housing agency or you use one, there will inevitably be discussions at the negotiation table. Although 3% seems small, revenue is revenue and business make up losses in other ways. There will likely be new fees for using third-parties or perhaps less resources allocated to managing larger room blocks.
Alternatively, some conversations will likely be held at the negotiation table with Marriott. Instead of altering client arrangements, planners may get more creative with their hotel agreements. Non-cash options like increased, transferable planner reward points can help soften the blow.
How will the industry respond to these changes?
Ultimately, only time will tell the full impact. It’s still ambiguous and everyone is watching this one closely.
- New groups are forming around this issue, like Meeting Planners Unite, giving third-party planners a unified, strong voice around the issue.
- Many large chains have taken up a “wait and see” position. They maintain the importance of the third-party booking agencies, and continue the status-quo of 10%. So far, they have not announced publicly any plans for changes in the works.
- Many smaller hotel groups and independent properties are taking advantage of this situation. Rather than do nothing, some are offering incentives like:
- increasing room block commissions by 3%
- adding 3% to food and beverage discounts
- bonus upgrades for group bookings
What’s your take?