HB Hospitality's Advisory Council participants:
left to right
• Michele Battaline, director, meetings and conferences, American Financial Services Association
• John Rovie, director of sales and marketing, Monarch Beach Resort, Dana Point, Calif.
• Kevin Burns, chief development officer, Arrow Exterminators
• Eric Kuester, vice president of sales and marketing, Pinehurst Resort, Pinehurst, N.C.
• Danielle Bishop, president, HB Hospitality
• Loren G. Edelstein, vice president, content director, Northstar Meetings Group
• David Furnish, vice president, sales and marketing, Sea Island, Ga.
• Pepper Dombroski, director of sales, The Broadmoor, Colorado Springs, Colo.
• Steven King, event director, the Oxford Club, Baltimore
• Amanda Mooney, event and office coordinator, Kinship Trust Co.
Talk of commissions and the pet peeves of negotiating might have been heated in another setting, with another group. But HB Hospitality's advisory council meeting is a lot like a family reunion -- just without the drama.
The group, established in 2011, is an invitation-only community of 100 independent luxury resorts and hotels, plus clients, who manage high-level meetings. Members interact on an online platform called The Hive, which has approximately 5,000 planner participants, and in a growing number of annual gatherings.
HB's latest meeting of the minds -- 15 suppliers and 15 buyers -- took place this past July in a particularly luxurious setting: the One&Only Palmilla in Los Cabos, Mexico. I had the pleasure of joining this year's reunion as moderator of a hot-topics panel. Following are highlights from that enlightening discussion.
How has the reduction in third-party commissions by Marriott and others affected you?
Michele Battaline: We book our own hotels, do all of our own contracts, but we have been writing into the contract a 10 percent "rebate" -- not a commission -- that comes back to us to offset conference costs. It's certainly not the driving force; it's not going to change how we make a decision. All things being equal, though, we'd certainly go with the property that was offering that concession.
Danielle Bishop: Let's hear from the hotel side: With Marriott and others making that shift to 7 percent, have you seen an increase in your business?
John Rovie: It can be a competitive advantage, for sure. As independent hotels, one of our biggest challenges is making sure we're leveraging all the different channels of distribution that we have, since we're not part of a huge organization. In tracking some of the major companies, our business is up a little bit year-over-year.
Eric Kuester: This is when it's an advantage to be an independent property such as Pinehurst. In reading some of Northstar's publications, I've learned that 40 to 60 percent of group business is intermediated via sourcing; we have to make sure we're getting our fair share of that distribution.
Pepper Dombroski: At The Broadmoor, it sparked the opportunity to evaluate what we do and to ask, "Are we going to follow the trend of the big chains?" We did not, and most independents did not.
Meanwhile, we've had an increase in people requesting higher than 10 percent commissions. It's very routine to get a request for 12 percent or 15 percent from a single source. We've had to set up some guidelines so that we're being fair across the platform.
How do you determine how much commission to pay the person who brought you the business?
Dombroski: It's interesting, because there's such a variety between the third parties. We find some who simply source it, and they're getting the 10 percent, and some who have developed the program and are there through operations, and they're getting the 10 percent. We've decided that we'll compensate any third party, from a single source, at 10 percent.
But we do allow two sources to be commissioned on a single booking, up to a total of 15 percent. The second commission really is a rep company, or a membership-based company, and that's a little bit different. Each hotel has to set its own rules, but it's not unheard of to have a 15 percent booking.
What value do third parties bring to planners?
Kevin Burns: I think somewhere along the way we've lost sight of that. Some third parties really do add a tremendous amount of value, especially if they introduce you to a property that you didn't know about. I can't speak for the hoteliers on what the right amount is, but certainly they have earned the right to earn a commission.
When I use a third party, my expectation is pretty hefty. I mean, "You're getting paid for this, you better bring me something that I can't just go book direct." In some cases, it's a matter of staffing. It's easier for me to have a third party than to bring an employee in and pay him 50 grand plus benefits, right?
In what other ways do third parties make your job easier?
Burns: If a third party has a relationship with a property that he or she has booked on multiple occasions, we can get to a pretty good number relatively quickly -- it's not this drawn-out battle. So, there's value there.
In terms of contract language, I have my own contract, and a third party can and does help work through that, because they know what my hot buttons are, what I will and won't negotiate. So, again, there's a big time-savings for me to have a third party that understands those things, and I don't have to start over with a new property and say, "Okay, John, you gotta understand, this is my hot button."
Rovie: I would say from the hotel side that third parties add value for us, too. We're all trying to do more with less, and getting from site inspection to a signed contract is a very important thing. If another party can help facilitate that, that's an example of value.
Sometimes multiple third parties are credited for one piece of business. How does that happen?
Bishop: I think it's important to note that intermediaries are so important for these independent properties, because they have to get their name out and they need as many allies as possible. There is not one hotel in here that would say that they are against paying commission when the business is new and when that intermediary adds authentic value by being a strategic partner.
But when planners copy multiple organizations on a lead because they think one might get a better deal than another, that kicks open a hornet's nest and makes the situation very bad. If planners choose to partner with an intermediary, they need to decide who and really eliminate the practice of cc'ing multiple, possibly competing organizations, because that is where things get very dicey, and it becomes a commission-chasing conundrum.
Dombroski: It's a problem with the online platforms. Planners can open a drop-down menu and check multiple boxes for who should get a commission. Then I have to go back and say, "Which one do you want us to pursue?"
Many times, the client has told us, "We don't want to pick. I know somebody from this organization, somebody from this organization... We want you to pick." That puts us in a really difficult situation -- and we won't do it. Ultimately, we say, "That's a decision that you need to make, and we will honor your wish."
Rovie: And then when you decline the others, there's a back and forth of, "Why did you decline me and not them?" And it tatters that relationship.