Sick of compensating sports planners and tournament directors to help with event expenses, Marriott International took a stand in February. The result, which may not be fully known for years, could change the way the sports tourism business works.
It also has reignited a fierce debate about a commonplace practice that industry veterans say has become out of hand.
Originally conceived as a way to assist sports planners and venues with filling rooms during an economic crisis (see sidebar), escalating rebate charges—sometimes soaring up to $50 per room night—were a sign to Marriott that the surcharge has become more of a crutch than a necessity.
The company suggested capping all rebate requests at $10 per room night after commission, and hopes other hotel companies will follow suit.
"Over the past few years, hotel rebates and concessions by some parties have been growing out of control." — Paul Somogyi, Marriott International
“It’s not sustainable for tournaments to outsource their costs to us through escalating rebates, while also expecting us to pay a full 10 percent to third-party service providers,” says Paul Somogyi, director of sales for Marriott’s middle market, government and affinity segments. “Over the past few years, hotel rebates and concessions by some parties have been growing out of control.”
Somogyi admits the guidelines are recommendations, not mandates, and each property should act in its own best interest.
But the symbolism has been a rallying cry to push the industry to adapt to a recovering economy.
Those in favor of room rebates, especially in their use with stay-to-play events, say many problems arise from greed and execution. In most cases, sports planners and event owners are legitimately concerned they will lose teams looking for lower fees. T
om Berkman, who has worked on 2,200 events since founding Tournament Housing Services in 1998, adds that the money can be used for long-term projects and higher-minded goals. “It’s a big challenge for [sports planners] to have enough money to do what they want to do, whether it’s facilities or scholarship programs, which so many of them [fund] to help needy kids participate in sports,” says Berkman.
While parents will argue that limiting housing options leads to greater individual costs, event owners like Lauri Dagostino, founder of Asics Big South National Qualifier volleyball tournament, say rebates result in better group prices.
"Our job isn’t to look out for one family, it’s to look out for all of them." — Lauri Dagostino, founder of Asics Big South National Qualifier
That’s because rebates lead to stay to play, which leads to higher room pickup and trackable business, which leads to more solid economic reports—which lead to an event having a better chance of getting the space it wants for a price it can afford.
That data gives a rights holder or tournament front-runner a better negotiating tool for scoring the lowest rate for their teams and accompanying family and friends.
“Our job isn’t to look out for one family, it’s to look out for all of them,” says Dagostino.
Don Schumacher, executive director of the National Association of Sports Commissions, says there is a big downside to the trend. He is among those who think the ripple effects of high rebates may upset the upward trajectory the sports tourism industry is experiencing. He argues better planning and budgeting should take the place of rebates. “
There’s nothing inherently wrong with rebates or stay to play or commissions,” he says. “What’s wrong is when they get out of hand. I’m not saying we should stop rebates or stop commissions. What I’m saying is that reasonable people have to be reasonable.”
Somogyi says one of his clients admits that registration fees, sponsorships and apparel generate the bulk of tournament revenue.
Rebates are “purely icing on the cake,” he says. Will sports planners be able to give up that icing? They may have to cut back at the very least as rebates receive higher scrutiny. “More questions are being asked regarding what is fair, ethical, legal and, above all, where they wish to place themselves moving forward,” says Chris Butlin, CEO and president of West Coast operations at CSTT Sports Management. “The sports market certainly needs guidance, boundaries and a certain amount of standard practice implemented before economic pressure dictates a radical change in what the market will bear.”
Related: The Pros and Cons of Hotel Rebates