August 23, 2016
What does ethical practice mean
It shows its face on a regular basis as a hot topic of debate in the events industry. Ethical practice recently reappeared at M&IT’s latest EventHuddle when a panel of industry experts from venue sales and venue agency came together to debate the thorny topic of venue commissions payable to agents.
The debate centred on the assertion that ‘venues say agencies are threatening to pull business if commission isn’t matched’ and has been called “totally unethical.” It is generally accepted, I believe, that where commission is payable by a venue for the agent introducing the venue to their client and resulting in a booking, will be at the rate of 8% on net rates i.e. before tax.
There are occasions, usually during quiet summer months, when venues incentivise agents with preferential day delegate rates and increased commission rates, typically to 10%. Sourcing a range of venue options on behalf of the clients is time consuming and can be frustrating when dates and/or numbers change. It requires the exercise to be repeated to a new brief therefore the commission payable by the venue is usually the only compensation the agent receives for this type of work.
There are agencies who avoid this altogether and charge a straight fee based on the anticipated time and resources required to present venue options to their client and secure a contracted booking, which begs the question as to whether a client going direct or an agency seeking non commissionable rates, can secure lower rates? Venues will vigorously protest that this is not the case but I’m sure there are those out there that could demonstrate otherwise.
Commission rates should not be part of the decision making process. The best interests of the client and their event’s requirements must always be paramount and if that means choosing a venue that does not pay commission then so be it.