Hotels are being compelled to hand out larger commissions because some venue finders are selecting the properties they work with on purely a profit basis, a source has said.
While commission rates vary between individual hotels, an industry insider has claimed that some venue finders are choosing only to work with hotels that offer larger commissions.
Others are even demanding greater commissions for conferences and events and requesting commission on all food and beverage, the source added.
“Hotels are fighting for business in the current economic environment, and yet are being held to ransom by some small companies who are demanding that they pay greater commission for their services,” she told The Nibbler. “The valuable services of venue finders are being destroyed by an unscrupulous few.”
While larger hotels are often happy to cough up the extra commission for guaranteed business, the insider, who wished to remain anonymous, said the trend was crippling for smaller hotels who can’t afford to increase commissions.
“The commission system is becoming corrupt and causing smaller hotels to lose out to larger chains that can offer more commission,” she said.
The source believed there was no problem with hotels boosting commissions, but stressed that it was up to venue finders to be up front with their clients.
Meetings & Events Australia (MEA) chief executive Linda Gaunt said she was aware of the trend, but added that no individuals had raised the issue with the industry body.
But Australian Hotels Association (AHA) corporate affairs manager Steven Fanner said it was unlikely that hotels would increase commissions for no reward.
“Hotels will avoid paying heavy commissions for business which isn’t profitable, so venue finders need to provide a value proposition when determining their commissions,” he said.
Fanner added that the issue had never been raised with the AHA and that all venue finders are subject to competition law “like any other business”.
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