The Great Rebate Debate

By Joe Bush, August 29, 2015

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.

Tom 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.

 

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