The Pros and Cons of Hotel Rebates

We break down the debate over hotel rebates in the sports tourism industry.

The pros and cons of hotel rebates

When the Great Recession hit in 2008, amateur sports were among the only sectors of the U.S. economy that were not cut back. Parents struggled to pay for their children’s activities as their budgets tightened, and looked for the best travel deals. Desperate to fill rooms, hotels agreed to the rebate model, which relatedly brought about stay to play, giving financial incentives to venues and event organizations to bring participants under one roof.

Rebate Champions: Sports planners, tournament directors

Pros

> Rebates increase the predictability of actualized room use and revenue, providing evidence for future destination cities of the event’s ability
to deliver promised room nights.

> Rebates can help pay for expenses like photographers and speakers on key issues.

> Nonprofit clubs, of which there are many, may balk at higher registration fees but may be able
to rely on extended family and/or college coaches to contribute to a rebate fund.

“It’s not about greed, it’s about an organization that understands they have a business to run and they have to generate a revenue stream however many ways they can.” —Tom Berkman, founder, Tournament Housing Services

Rebate Challengers: Third-party planners, parents

Cons

> Hotels have to bow to margin-killing demands like comped suites, double reward miles and limited liability if rooms are not filled.

> Registration fees can be—and some say should be—allocated for amenities promised in the program rather than relying on rebates.

> Parents are restricted from searching for cheaper rates and often can’t use accrued loyalty points, thus increasing costs and lowering team participation. In the long term, this potentially can shorten an event’s lifespan.

“It seems to me disingenuous to ignore the growth and reliance on room rebates when the very people who are most affected by it are the people all the destinations are most anxious to get to their cities, and that’s the family unit and friends traveling with the players.”—Don Schumacher, executive director, National Association of Sports Commissions

The Alternative: Commissions

Event companies can charge only commission and ditch the rebate, following a policy CSTT Sports Management uses. CSTT bills 10 to 13 percent and splits the commission with the sports planner. Chris Butlin, CEO and president of West Coast operations at CSTT, says this ensures teams are guaranteed the lowest rate and have a choice of hotels. Additionally, hotels don’t worry about rate integrity, deal with fewer complaints and can negotiate the commission percentage based solely on the service they receive.

“Hotel revenue is always regarded as a bonus and not as something dependable.” —Chris Butlin, CEO and president, West Coast operations, CSTT Sports Management

A Success Story in the Making: Dallas Sports Commission Sales Director Ginger Lively Cade is a firm believer that there are no problems with rebates that can’t be solved with fair negotiations. Case in point: a first-time event scheduled for Dallas in 2016 involving a housing company charging a 10 percent commission to manage room blocks. Originally, the sports planner sought a $12 rebate to offset the conservative estimate of actual room use, or pickup, which was slotted to pay for the rental of the event venue. Cade’s team suggested the hotel offer a lower rate for a first-time event in hopes of exceeding the estimated pickup. In the end, the client agreed to a deal with a $5 rebate and lower room rates, which all parties hope leads to good news all around.

Down the Aisle: Lauri Dagostino, who founded and runs the Asics Big South National Qualifier volleyball tournament, brought 12,000 participants across 1,200 teams—filling 30,000 room nights and using 92 hotels—to Atlanta in April. But she sheds the big numbers when presenting her emotional argument for rebates, citing an example of a couple who did not have the financial resources or time to have a wedding. They asked Dagostino if they could have a ceremony at Big South, a request she was able to accommodate because of the revenue generated by rebates.

Related: The Great Rebate Debate