Disclosure

1. The hotel should have an obligation to disclose any and all third-party rebates, overrides, commissions, fees, or incentives that will be passed on to the association, company, or attendee in the form of increased pricing.
2. The association or company should have the responsibility to provide appropriate disclosure to attendees, either individual or corporate, whose expense for attending will be increased due to agreements for rebates, overrides, commissions, fees, or incentives paid to third-party vendors or the organization, its governing body, paid executives, or elected officers.
3. The third-party vendor (e.g., AV company, exhibit company, florist, destination management company, housing company, meeting management company, or site selection company) should have a responsibility to provide the association or company contracting the services with appropriate disclosure of rebates, overrides, commissions, fees, or incentives that will be passed on in the form of increased pricing if the law requires it.
4. The association or company purchasing group services from a hotel should have an obligation to disclose any known costs that will require funding through the hotel, convention bureau or other vendors during the RFP stage of site selection and negotiation (e.g., housing cost).

The third point is important in that it should add new responsibility to third-party vendors to take responsibility for communicating with the customer about fee structures and pricing. If a hotel and an AV company have an arrangement through which the hotel receives a commission on business serviced by that company in the hotel and this cost is added on to the normal rental prices, the AV company, not the hotel, should have the responsibility of disclosing this information to the customer. However, if such arrangements are designated by the vendor as a cost of doing business (such as rent to a hotel by a gift shop for retail space), disclosure may not be needed.

Value for Fees Paid

1. All parties acknowledge that there is a need and a value inherent to all vendors either direct or indirect and that fair market practices, the competitive environment, and price value perception should be the guideposts for establishing fees and pricing.
2. If the vendor (e.g., hotel or convention bureau) is responsible for all or part of the fees paid for a commodity or service provided to the buyer or attendee, the vendor should also participate, when possible, in contractor selection and definition of the scope of work for that contractor.
3. All parties should agree that the fees charged are fair and equitable based upon the services performed. This protects the attendee from usurious assessments caused by poor planning, mismanagement, or malfeasance.

Fair and Equitable Business Practices

1. All fees, commissions, rebates, and incentives should be disclosed by all parties as part of the RFP and subsequent contract, including expected assignment of responsibility for paying the fees.
2. The third-party agent contracting on behalf of an end user group should disclose the name of the end user and all known information about the name, type, and scope of the event before a hotel or destination is obligated to hold tentative space or quote rates.
3. The hotel or destination should not contact an end user directly about an event that they have already discussed with a third party, serving as agent of record for the end user, without discussing that contact first with the third-party agent of record.
4. In a competitive bid situation, prior to establishing an agent of record, any tentative arrangements or price quotations held for the event would belong to the end user until such time as the option expires, space is released by all bidding agencies, or an agent of record is selected by the end user.
5. The third-party agent has a responsibility to present all information received from bidding hotels and destinations to the end user for review. While it is appropriate for the third party to make a recommendation to the end user, it is unethical to withhold information on hotels or destinations that responded to the RFP and meet the minimum specifications for the event.
6. The end user should have the ultimate right and responsibility to determine the amount and nature of direct contact and involvement to be maintained with hotels and destinations.
7. Commissions paid by hotels or destinations to create or direct new or unique business to their facilities is not reassignable in such cases. If the end user, at some future point, decides to terminate its agreement with the original third-party agent of record, the end user should not be able to reassign to the new agent any fees, commissions, rebates, or incentives that were promised to the original agent of record. The hotel has no obligation to compensate the new agent of record in any manner.
8. The third-party should not withhold or alter RFP information to allow any bidding party an unfair advantage in the bidding process.
9. The third party agent should have a responsibility to disclose to the end user any inducements, fees, overrides or incentives, that would influence the recommendation of one destination over another.
10.  The third party should not take incentives or complimentary arrangements meant for the end user and intentionally price them or mark them up for the purpose of increasing profit to the third party.

Definitions and Terms

Organization Definitions

Multi-Management Firms

• Often offer complete turn-key organizational support, including administrative and meeting management services
• May offer limited services depending on organizations' needs and budget
• More often utilized by associations and user groups
• Often are fee based to the end user organization, but can also be commissionable
• Contracts usually signed by third-party providers acting as agents for end user organizations
• Examples: Courtesy Associates; Anthony J. Jannetti, Inc.; Smith Bucklin & Associates, Inc.; Talley Management Group

Meeting Management Companies

• Normally handle site selection, negotiation, and turn-key support for the meeting process for organizations
• May be transaction based or on a contract with end user
• May be commissionable or in-house fee based In some cases, a third-party meeting management company may become the sole customer if an organization turns over the meeting planning function to it May be bidding on a transaction by transaction basis, have a short or long-term letter of appointment, or may even be in-house or an outsourced former employee of the end user Most often, end user organizations sign the contracts
• Examples: Conferon, McGettigan Partners

Housing Companies

• Can be, but typically not involved in site selection or negotiation Commissionable (5 percent to 10 percent) or fee/transaction based for housing services
• Registration services may not always be included
• Generally utilized when housing package includes multiple hotels Sometimes contracted by end user organizations after the business is confirmed with city and hotels
• Examples: CMR, ITS, Rogal, Travel Planners

Site Search Companies

• Organizations that supplement customers' meeting planning functions, including the process of uncovering qualified, available sites for future events and meetings
• May or may not control negotiation, actual site selection, or contracting, but may have influence over these issues Most often operate by commissioning hotel room rates
• Examples: Conference Direct, Helms Brisco

Incentive Companies

• Third-party providers that actively pursue fulfillment of reward and recognition based travel and potentially merchandise programs
• Purchasing may be centralized and separate from their account management process
• Provide turn-key support for events and in some cases are involved within the end user?s organization in a consulting role
• Are most often utilized by corporations
• Most often, the third party signs contracts acting as agent for the end user organization
• Examples: BI, Carlson, Maritz

Definitions of Payment Terms

Commission

• An amount paid for services or business referred; generally calculated as a percentage of total revenue and usually paid at the time the revenue is produced
• Example: to pay for housing services, meeting management, travel services or in lieu of rent as may be the case for in-house AV service or other retail tenants

Blind Commission

• Commissions that are paid by a vendor (hotel, AV company, etc.) to a third-party provider without the knowledge of and/or undisclosed to the end user or organization
• Can be either a flat or percentage fee
• Example: to underwrite shuttle, convention center, a city?s housing bureau, third-party management, hotel paying commission to lead referral or incentive company

Inducements

• Marketing tools/programs used to influence buying patterns and build customer loyalty
• Example: hotel points, airline miles

Markup

• A supplemental sum added to the cost of a product or service to generate additional revenues
• Often used by organizations to help underwrite other meeting expenses
• Example: markup prices on tours

Rebate

• A return of part of a payment. Often used between a hotel and organization to offset the organization?s meeting costs
• Can be a flat fee or percentage
• Example: $5 per room per night to underwrite shuttle, convention center, food and beverage events

Overrides

• A sum of money paid for services rendered based on defined production achievement and generally offered as an additional incentive to exceed production
• Usually hotel specific
• Used in cases of volume business or multiple events during a defined period of time.
• Example: a wholesaler or incentive company produced 10,000 room nights in 1997 for a specific hotel, that hotel has a need in 1998 and may offer a higher percentage commission, or override, if that customer exceeds past production in 1998

Task Force Roster

John Folks, Minding Your Business, Inc., task force chair
Sheila Stampfli, Courtesy Associates, Board liaison
Dian Parker, PCMA, staff liaison
Andi Arabak, Washington DC Convention and Visitors Bureau
Michael Burns, Conferon, Inc.
Jane Moyse Chaney, Orlando/Orange County Convention & Visitors Bureau
Litsa Deck, All Seasons Travel Michele Fetsko, American Speech-Language-Hearing Associates
Kelly Fox, American Health Information Management Association
Ann Havens, Grand Hyatt Washington
Marlene Hetzel, International Travel Service
Donna Karl, American Academy of Pediatrics
Victoria Palvig, Omni Rosen Hotel
Michael Polin, Narcotics Anonymous World Services, Inc.
Bruce Small, Hyatt Hotels Corporation
Sherman Wade, Shepard Convention Services, Inc.