{"id":1530,"date":"2010-12-20T01:33:32","date_gmt":"2010-12-20T01:33:32","guid":{"rendered":"http:\/\/hotel-lobbyists.com\/blog\/?p=145"},"modified":"2010-12-20T01:33:32","modified_gmt":"2010-12-20T01:33:32","slug":"commission-clauses","status":"publish","type":"post","link":"https:\/\/hotel-lobbyists.com\/index.php\/2010\/12\/20\/commission-clauses\/","title":{"rendered":"Commission Clauses"},"content":{"rendered":"

<\/a>\"\"<\/a>Commissions seem to be a sensitive area in the tri-fold relationship between hotels, third-party agents, and the customer.\u00a0 And often the awkwardness about it comes because there\u2019s a fourth party involved in some of the transactions \u2013 the end user.\u00a0 Perhaps we should define the roles of each of these parties when it comes to booking a hotel for a group.<\/p>\n

The Hotel.\u00a0 Hotels are quite accustomed to quoting commissionable rates.\u00a0 Travel agents have been booking individual rooms with a commission for years.\u00a0 A third-party is a group travel agent and hotels are rather used to quoting commissionable rates to them as well.\u00a0 Industry standard is a 10% commission.\u00a0 That means that the third-party gets paid by the hotel, and not the customer, for the service of placing the group.\u00a0 Hotels typically do not raise their rates to accommodate this commission as commissions are usually measured as an expense, rather than something that would affect their average rate.\u00a0 It is common for a hotel to even document in their contract that rates have not been raised for commission purposes.\u00a0 This can be used to help put the customer\u2019s mind at ease.\u00a0 If they were being charged more for using a third-party, why would they?<\/p>\n

The Third Party.\u00a0 The third party generally works for free in the eyes of the customer.\u00a0 The model works rather well this way as the customer gets the equivalent of an extra staff member who requires no payment.\u00a0 On the other hand, the third party will be paid by the hotel who is awarded the group as a percentage of room revenue.\u00a0 This is the only revenue stream of the prototype third-party organization.<\/p>\n

The Customer.\u00a0 This is the person or group who will sign the contract and be responsible for the payment and the execution of the program, whether it materializes or cancels.\u00a0 The customer is financially liable to the hotel but has no obligation outside of a handshake to the third-party.\u00a0 Typically, once a contract is signed, the customer and the hotel have a direct one-on-one relationship and the third-party would only get involved again were there a significant issue, an addition, a subtraction, or some other development which would necessitate close examination of the contract once more.\u00a0<\/p>\n

The End-User.\u00a0 Here\u2019s where things can get sticky.\u00a0 Many times the customer, the literal entity who is paying for the conference itself, is not the end user.\u00a0 Often times, an end user might hire an organization to produce a meeting.\u00a0 The end user only has a relationship with the customer.\u00a0 They have no direct contact with the hotel because they\u2019ve contracted the customer to do that.\u00a0 And they certainly don\u2019t have a relationship with the third-party.\u00a0 The big difference here is that the end user will have assuredly heard of hotel, and will be exposed to the hotel, but they might never hear of or be exposed to the third party.\u00a0 And since the customer hired the third party for no cost, they often see no need to disclose to the end user that they\u2019ve used a service that makes their job easier.\u00a0<\/p>\n

Why can this fourth party relationship be awkward?\u00a0 Because in many instances, though the end user doesn\u2019t sign the contract itself, they are privy to it.\u00a0 And if they\u2019ve hired the customer to produce their meeting, seeing a third-party they\u2019ve never heard of on the document can raise unnecessary questions about how the customer does its business.\u00a0 And it\u2019s why the customer might ask the hotel to leave the third-party commission clause off of the contract.<\/p>\n

Hotels are not inclined to oblige in many cases because this practice is seen as unethical \u2013 that keeping the commission clause off the contract is not in line with full disclosure.\u00a0 I see the rationale. \u00a0Though my position is biased because I am indeed a third-party, I don\u2019t see this as unethical.\u00a0<\/p>\n

My argument is that the end user has hired the customer to produce the meeting, but they haven\u2019t dictated how the customer is to find their sites.\u00a0 In the same way that the end user doesn\u2019t need to know from who the organization they contracted buy their bottled water, or what training videos they use to keep their employee morale high, or what insurance covers their staff, or who gets to drive the company vehicle \u2013 why does the end user need to know that the customer uses a service to do their site selection?\u00a0<\/p>\n

When put in this position, I\u2019ve even offered to have my customer sign my own commission agreement so that the hotel is aware I\u2019ve disclosed all that I need to disclose.\u00a0 It\u2019s my customer who doesn\u2019t want to disclose all to their end user.\u00a0 This placates the hotel in most cases.\u00a0<\/p>\n

Do I like when I\u2019m asked to keep commission clauses off of contracts? \u00a0No.\u00a0 If I thought this were a devious, unethical practice, I couldn\u2019t rightly ask it.\u00a0 Frankly, I feel like I\u2019m having an affair when I do it.\u00a0 But in truth, I think it\u2019s mostly misunderstood.<\/p>\n","protected":false},"excerpt":{"rendered":"

Commissions seem to be a sensitive area in the tri-fold relationship between hotels, third-party agents, and the customer.\u00a0 And often the awkwardness about it comes because there\u2019s a fourth party involved in some of the transactions \u2013 the end user.\u00a0 Perhaps we should define the roles of each of these parties when it comes to […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[2,1],"tags":[],"yoast_head":"\nCommission Clauses - hotel-lobbyists.com<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/hotel-lobbyists.com\/index.php\/2010\/12\/20\/commission-clauses\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Commission Clauses - 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