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Are agencies blackmailing venues over commission?

Venues say agencies are threatening to pull business if commission isn't matched, latest EventHuddle debate hears

Pictured: (from left) Juliet Price (HBAA), Des McLaughlin (events veteran), moderator Samme Allen (Sequoia Partnership), Rachelle Valladares (Dezika) and Carlo Zoccali (Arsenal FC)

Some agencies are threatening to take business elsewhere unless venues match their competitor’s commission rates, in a practice that has been called “totally unethical” at the latest EventHuddle.

A venue-based audience member told the panel that he had encountered situations where agencies had been “completely blatant” with wanting higher commission rates, saying “some will say ‘Venue B has offered us 15 per cent – if you don’t match it, the business will go to Venue B’.” He added: “It’s a small portion but there are some agents that do it.”

Panel member Rachelle Valladares, from Dezika, said: “To me, it’s something I’d never even thought about because it’s totally unethical.”

Fellow panel member Juliet Price, consultant executive director at HBAA, added: “We don’t dictate commercial terms … that’s a discussion between the venue and agent. But certainly in the spirit of the Code of Practice, we’d like to think that wouldn’t happen on any sort of scale. If a venue or agent you feel contravenes the code, you can raise that with (HBAA).”

The comments came in the latest EventHuddle discussion at 1 Wimpole Street on Thursday morning, on the topic of Venue booking commission: is it time for change?

Valladares and Price were joined on the panel by former Grass Roots Group MD Des McLaughlin and Arsenal Football Club sales and operations manager Carlo Zoccali.

Zoccali advocated for a change in venue finding commission, saying there needed to be more clarity in the process. He said: “We need to get some more understanding of what best practice is… so if you’re  a smaller venue, can you afford to pay 15 per cent on commission rates when you’ve got overheads etc to pay?”

He said it wasn’t always a level playing field for venues. “The independent properties I come across are constantly whinging about different styles of commission or partnership fees or things they have to pay to level the playing field with bigger boys. If venues are looking at commission and partnership fees, then there must be clarity on (what is what) to understand what we’re trying to achieve.”

Price said commission rates were becoming far more visible over the years and encouraged agencies and venues to share information. “Collaborating is all about best practice,” she said. “Some contracts state what commission is being paid. It’s far more visible than it was 10 years ago.”

Another audience member raised the question of venues having to “pay to play” and whether it was acceptable. McLaughlin said: “I’ve never charged hotels to pay a fee to be on venue databases. There are companies who do it. I don’t know who they justify charging it to, but if venues want to pay it then they can. Maybe it’s up to them (venues) to go in and understand how the agency works and ask questions and see if they’re comfortable with it.”

Moderator Samme Allen, co-founder of the Sequoia Partnership, said: “The words communication, transparency and clarity seem to keep surfacing and I think this is a debate that needs to be continued.”

  • Mark McCloskey 18/08/2016

    This is a really interesting article. Having worked for a leading agency and now for a major conference and events venue I've seen this from both sides on one hand most agencies are offering free venue find services offset by commission paid by venues or indeed partner agreement overrides, I note the comment made regarding tight agency margins; nobody seems to mention that margins for the venue are tight as well. I think there is a missing point in this whole debate and that's the customer, how many agencies are open and truthful on their commercial model? If value is the key then surely the customer should be laying that request down at the outset negating any ambiguity when it comes to agents pushing preferred or venues that offer higher commission or override payments.
    Venues clearly rely on agency business as a source to many major clients and that in itself will never change but I think a partnership approach based on transparency is key, venues ultimately need to ensure also that conference sales and event managers have he skills and knowledge to understand the commission model and how it operates. That said I am of the belief the days of commission will soon become a thing of the past and if customers want to drive value and a managed approach to procuring meetings and events it's something they will have to become prepared to pay for.

  • Bill Prosser of TCE Group 16/08/2016

    It's all about the value.

    We as a DMC bring in business from around the world (we have brought in groups to the UK from over 40 countries - 21 countries in the last 24 months alone) and believe we offer greater value to venues than venue finding agencies.

    We are almost always bringing venues business they would not otherwise have had. This is especially true of smaller venues who would have very little chance of winning business from difficult markets like Mexico, North America and Asia without a very significant increase in their overheads.

    And we don't just introduce business from hard-to-reach markets - we handle the admin, collect payment in advance, and deal with the client requirements etc - so our costs are much higher than those of a venue finding agency working with UK clients.

    So with the additional work we undertake and the higher value of the business we bring - we sometimes need higher commission rates to make projects viable.

    Many venues will ask us if we want a nett or commissionable rate and cost and quote accordingly - which I would suggest is far more unethical business practice. They are not actually offering commission - just quoting a higher rate than they would to a direct client.

  • Jackie Basden of Events & Venues 16/08/2016

    Negotiating an agreed commission level should be a justified part of the process but not used as a blackmailing tactic! We do find that many staff within a conference office don't have a clear understanding of the commission levels paid - asking if paid on gross or net is usually fine, but asking if that is excluding or including our vat is one step too far. Agents’ margins are tight, so we have to consider if a venue offering 8 per cent on net including our vat is really the best venue for the event over one that is offering 10 per cent on gross excluding our vat. On revenue worth £1,000 that's a difference between £66.66 or £120.00. To us it's more about keeping the client happy so the most suitable venue always wins and we get the repeat business. I believe it should be part of the negotiations but not a demand. We should be looking after the interests of the venue AND the client.

  • Kim Barker of Reservation Highway 16/08/2016

    As an agency offering a free venue finding service for the association market we wholly put our clients above commission.
    The 'best venue offer' for our client will always come first!

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