Feature: Hotel Booking Agents
➔ Chris Peacock, director of meetings and events-focused Conference Care and current chairman of the Hotel Booking Agents Association (HBAA), is very confident that commissions are thriving in his sector of the market and puts that down to the high touch element of booking meetings. “I would say commissions are expanding
in the MICE market. The model, which is transparent to the client, is successful. There is no cloak and dagger. Clients know the margin we are making,” says Peacock. “But then again we are not as process-driven
as pure accommodation booking so it may be interesting to see the way commissions go in this area,” he adds. One lone voice in this debate, however, is
Andy Hampshaw, managing director at Travel by Appointment. He rubbishes the idea that the hotel industry is too competitive and fragmented to banish commissions and warns HBAs to take note of the airlines’ actions. “HBAs are positioning themselves as if commissions will last forever. They might as well stand on the beach, build a sandcastle and hope the tide never comes in. They are working for the client and expecting the supplier to pay for it. The hotels are thinking ‘they are beating me up on cost, working for the client and then expecting me to pay for it’,” says Hampshaw. “The basic model is really the
management fee because the other company we are looking at doesn’t ask for one’. They don’t think about the commission that that agency is getting. Whatever hotel we choose for a client and whatever rate we negotiate, you’ll pay the same fee.” He concludes, “Working on commission
same as the airlines. Yes, it’s more competitive, but if you look at some of the really big, high profile chains like Four Seasons or Hyatt and imagine they decide not to pay base commissions, would their market share be adversely affected? I don’t think so. Not much. And I think that other chains would then follow suit pretty fast. It’s just bad practice to rely heavily on commission,” he says. Travel by Appointment doesn’t work on a commission basis, charging instead a flat transaction fee or management fee. Hampshaw adds, “We are seen as totally transparent. Right now, we are working on a pitch with a TV production company which has said to us ‘we don’t want to pay a
“Working on commission is a totally outdated business model. Clients don’t get told about the commission. Companies who embrace change will survive”
is a totally outdated business model. Clients don’t get told about the commission. The good companies who embrace change will survive. The rest simply won’t survive.” Whether commissions survive or not, many believe that the success of the HBA industry – with multinationals now routinely handing over huge chunks of business – means that you have to be a big player these days to keep up and that some smaller companies will not be able to compete, leading to come consolidation. As BSI’s Elswood says,
“Scale is everything when it comes to leveraging the best price. But you need to be careful because when you consolidate, you have to make sure all those carefully-built-up relationships are maintained.” Inntel’s O’Neill sees consolidation ahead.
He says, “For us, we would rather grow organically but I think there are a lot of agencies going through some difficulties and are almost at the end of their capabilities. “These days you have to be a reasonable size to be part of the market. The attention the
hotels are giving to small agencies is dimin- ishing because they haven’t got the time and the resources to deal with them. That is starting to bite a little bit now.” Executive director at the HBAA, Peter Ducker, believes that what the HBAs should really be focusing on now is the current trend towards the consolidation of meeting spend with hotel procurement. This is the last area of corporate spend to really be looked at but corporates, in their never-ending bid to keep costs down, have now realised savings can be made. Ducker says, “Now we are seeing corporates
not only wanting agents to run their meetings and events programme but also manage their own internal meeting spaces to make sure they drive greater efficiencies from them.” Conference Care’s Peacock adds, “Right
now we are seeing that TMCs are looking to consolidate with M&E experts because they haven’t got the set up to do M&E right. I don’t think you can take 20 years of experience and relationships and put it on a software pro- gramme. It’s miles more people-orientated than that, and that’s what the TMCs see too so they are outsourcing high touch venue programmes to us.” Ducker also puts the kybosh on any notion
that the survival of HBAs depends on the whim of corporates in terms of currently favouring the best-in-class route to hotel procurement rather than a TMC one-stop-shop approach. “We’ve moved on since those concerns were around,” he says. “Technology has moved us forward. Now corporates can use a range of travel people from different agencies because they all know how to work together. HBAs and TMCs collaborate routinely and are very good at consolidating the MI for the customer.”
66 I THE BUSINESS TRAVEL MAGAZINE 18 I THE BUSINESS TRAVEL MAGAZINE
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