Corruption and dodgy deals tarnishing events industry reputation
15 Aug 2018 - by Rebecca Robinson
PCOs, commissions and unethical business practices are currently in the spotlight, but we should be careful not to neglect the role that other industry participants have played in contributing to the abuse of the commission-based business model.
Many PCOs and agents experience companies abusing their resources. For example, a client may provide a brief that has limited information and we are then required to spend a large amount of time attempting to get accurate information. After travelling back and forth to meetings, doing site inspections, and submitting proposals incorporating many other suppliers, PCOs are advised that the exercise was purely to establish a budget. Or the client proceeds to make the booking with the suppliers directly, further requesting the commission back from the suppliers as a corporate saving. Billing corporates by the hour, or perhaps having an agreement in place to ensure this exploitation is avoided, may remedy this issue.
I have heard of numerous cases, where individuals employed by corporates and government manipulate bookings in return for receiving an under-the-table kickback. Most hotels don’t entertain this. But, when these bookings end up being confirmed, it casts doubt on whether the deal was above board. There are businesses that are desperate for bookings and some clients have learned that they can get away with corruption.
I have experienced sales staff from hotels approaching my clients directly, enticing them with lower rates if they cut out the PCO/agent. And I have also experienced a property not honouring the commission agreement that it put in place, which, after a dispute resolution, was swiftly adhered to. These properties are chasing revenue, damaging relationships with stakeholders and putting future business transactions at risk.
Corporates and government need to find a way to abolish corruption, and senior hotel sales management need to adopt and educate staff on ethical business practice within their teams.
It is also imperative that hotels and other suppliers conduct business with legitimate PCOs/agents to ensure that the booking and client relationships are managed professionally, and that the commission remunerations meet the criteria expected.
There is a large hotel group that has successfully implemented an effective commission agreement with PCOs and agents, by ensuring its business is registered, tax compliant, etc. The agreement defines criteria that need to be met to invoice for commission, including a list of project management tasks that the PCO/agent is responsible for fulfilling, and which alleviate pressure on the hotel’s internal resources. They see value in PCOs/agents, and this is likely a contributing factor to its success.
This agreement and policy do not allow for the possibility of individuals within corporate and government getting under-the-table commissions, and it clarifies the standards and expectations of a PCO/agent when conducting business with the hotel. I believe that such policies and agreements need to be put in place with all hotels that wish to take part in anti-corruption practices, and in raising industry standards.
There is a desperate need for a governing body in South Africa, where unethical business practice affecting the hospitality industry can be reported and rectified. There is also a need for setting industry standards for PCOs/agents and defining what services are delivered when earning a commission.
Rebecca Robinson is the owner of Dabchick – Group, Conference & Meeting specialists, a Conference Management company that has become an industry and thought leader since its establishment in 2015. Following a variety of positions held within the hospitality industry over the past 10 years, her focus shifted to the MICE segment, where she has been able to apply her knowledge and experience in building a competitive customer-centric company with an employee-focused culture. Robinson’s determined and optimistic character encourages and challenges improvements to the MICE sector in South Africa.