The Commission Conversation Isn't Going Away

Every few years, the event agency industry has the same conversation about commissions. Hotels talk of adjusting their rates, and agencies push back. Industry associations often get involved, and eventually things settle down… until the next time.

The 2018 Marriott and Hilton cuts were supposed to be a watershed moment. We were told that the commission model was dying, and agencies needed to transform or perish.

Seven years later, the commission model is still here. Agencies are still earning commissions, and yet the conversation keeps recurring.

What does that tell us?

The Model That Won't Die

When Marriott reduced group commissions from 10% to 7% in 2018, I wrote that I wasn't surprised. I'd been saying for years that unless agencies changed their habits, hotels would eventually respond. Many in the industry disagreed with me. They felt that group commissions were secure, that hotels needed agencies too much.

I have sympathy for both sides. As someone who spent 14 years in agency roles, I understand the pressure that commission cuts create, especially for smaller agencies operating on thin margins. However, I've also sat on hotel advisory boards and heard the frustration: rising distribution costs, perennially poor conversion rates, and a sense that the value equation wasn't working.

What I didn't predict was that the model would prove so resilient. Despite repeated predictions of its demise, the commission model persists. Why?

Several reasons.

Clients prefer it. Many corporate clients don't want to pay agency fees directly. The commission model keeps agency costs off their P&L. As long as clients prefer this arrangement, agencies have limited incentive to change.

Hotels need the business. Despite their complaints, hotels still rely on agencies for significant groups revenue — 60-75% in the UK, by some estimates. Walking away from that channel isn't realistic for most hotels and whilst Marriott and Hilton have big footprints in the UK (and Europe) it’s incomparable with their US dominance, where they can roll the dice and be more bullish on reducing commissions.

The alternatives are complicated. Fee-based models require different sales conversations, different client relationships, different internal operations. The transition cost is high, and the outcome is uncertain.

So the model continues, under pressure but intact.

What's Actually Changed

The commission model persists, but the context around it has changed.

Commission rates have compressed. The 10% that was standard for groups a decade ago may now be 7-8% in many markets. That's a significant margin reduction for agencies and that may mean more emphasis on over-ride commission deals and strategic sourcing. Not every agency has the clout for securing those deals and even those who do will still see erosion on their gains due to the pressure to offer rebates to corporate clients for guaranteeing business volume.

Client expectations have risen. Agencies are expected to deliver more services — technology, data, reporting, strategic insight — often without additional compensation. The scope has expanded while the margin has shrunk.

Technology is encroaching. AI tools can now handle tasks that agencies previously charged for (or absorbed as overhead). Venue sourcing, proposal generation, supplier management are all areas that are increasingly automatable. The transactional work that commission historically compensated is becoming less valuable. Albeit, the one saving grace for agencies is that a lot of industry technology development is poorly validated, rushed, and doesn’t deliver enough value to create a mass shift.

Procurement involvement has increased. Corporate procurement teams are more involved in agency selection and management. They bring category management thinking, competitive tendering, and pressure on rates. The relationship-driven sales of earlier eras are less common.

The commission model survives, but it's supporting less margin for more work.

The Value Question Underneath

Strip away the mechanics of commission, and there's a more fundamental question: what are agencies actually being paid for?

The traditional answer was sourcing and booking. Agencies found venues, negotiated rates, managed logistics, and commission compensated that work.

But if technology can do the sourcing, if clients can access venues directly, if the transactional work is commoditised, what's left for the agency?

This is the question that the commission conversation keeps circling around without quite addressing. It's not really about the percentage, it's about the value that percentage is supposed to represent.

Agencies that have a clear answer to this question — that can articulate and demonstrate value beyond the transaction — are in a stronger position. Agencies that are essentially being paid to do work that's being automated are in a weaker one.

What I Observed From Inside

When I was leading procurement and supply chain at event agencies, I took an approach that wasn't universal in the industry. I treated hotels and venues as clients as well as suppliers.

The logic was simple. If hotels pay us commission, we're providing them a service, and that service should deliver value — specifically, higher conversion rates and better business quality than they'd get from other channels.

We worked hard on this. We tracked conversion. We improved our processes to send better-qualified leads. We built relationships based on mutual value, not just transaction volume.

It worked. Hotels saw us as partners rather than just another cost of distribution. Our relationships were stronger, and our retention was higher.

However, this approach required effort, measurement, and a willingness to be accountable. Not every agency took the same view, and so the industry's aggregate performance — the 5-8% average conversion rates that hotels complained about — reflected that. I took average conversion rates to over 25% at two major agencies and hotel partnerships, commercial deals, and client satisfaction all increased because of it. Several months after leaving to begin my software business, some hoteliers pleaded with me to return to the agency because what I had understood, valued and championed was no longer being championed and the results, once again, reflected it.

Where This Leaves Us

The commission conversation isn't going away because the underlying tensions aren't resolved. Hotels still feel they're paying too much for too little value. Agencies still feel squeezed between rising client expectations and falling margins, and clients still prefer not to pay directly.

I don't think commission will disappear entirely, but I do think it will continue to compress, and agencies that rely primarily on commission income will find it increasingly difficult to compete.

The agencies that thrive will be the ones who answer the value question clearly. Not "we earn commission" but "we deliver this outcome, and here's how we're compensated for it."

That might include commission, it might include fees, or it might include performance-based models. The structure matters less than the clarity.

The commission conversation isn't really about commission. It's about value, and that conversation hasn’t even got started.

______________

Alan Newton spent 14 years in event agency leadership, including roles managing £70M-£250M in annual supplier spend. He now advises agencies on strategy, transformation, and commercial model development.