Industry Relieved by New GSA Travel Per Diems

Travel industry fears of a dramatic reduction in lodging per diems for federal employees have been eased with the General Services Administration’s announcement of its rates for fiscal year 2014.

The new per diem rates, which take effect Oct. 1, include increases in most markets. They also mark a return to the traditional methodology in establishing the rates, which the GSA sought to drop last year.  

One possible negative for the lodging industry: The long-established Lodging Conference Allowance, which permitted travelers to exceed the regular per diems when attending a conference, has been eliminated.

New per diems
The standard per diem rate for federal employees was increased from $77 to $83 per night.

Rates for most nonstandard markets – those locations that federal contractors travel to frequently – also were increased.

The rates in those markets vary depending on season and local conditions. For example, autumn per diem rates for New York, Chicago and San Francisco were raised, while those for Atlanta and Washington D.C. were decreased.

Fears averted
The GSA’s decision to stick with its traditional methodology for calculating the rates alleviated a significant fear for the hospitality industry.

Last year, the GSA considered eliminating a large number of hotels in determining per diem rates. That could have reduced per diems by as much as 30%, said Shawn McBurney, senior vice president of government affairs for the American Hotel & Lodging Association.

In response to industry outcry, the GSA instead froze rates at 2012 levels; those rates, McBurney pointed out, “were based on 2011 rates, when they were at record lows.”

For 2014, the GSA has reverted to its traditional methodology of eliminating only the highest and lowest rates in a market – and determining rates based on the remaining hotels.

Travel industry input
To get feedback from the private sector, the GSA formed a Government Travel Advisory Committee earlier this year. The first meeting concerned per diems and the new rates are partly a result of that meeting. The hotel industry is represented on the committee by Paul Somogyi, Marriott’s director of sales, middle market, government and affinity segments.

Erik Hansen, director of domestic policy for the U.S. Travel Association, called the new per diems “an improvement over recent years.”

“When the GSA was considering changing its methodology we explained to them frequently and thoroughly the consequences that would have both for federal workers and the travel industry. That message was received,” Hansen said.

“This is one indication that the government is beginning to make decisions on travel based on how important it is,” he said, adding, “We understand that when federal employees travel they should do it efficiently and stay in locations where they can save taxpayer dollars but also perform their duties.”

Conference allowance dropped
The impact of the elimination of the Conference Lodging Allowance, which permitted government travelers to spend up to 25% above per diems without prior approval, is uncertain.

The conference allowance was created because rates in convention-heavy cities tended to rise sharply when there were multiple conferences in town, McBurney explained.

The GSA predicts that eliminating the Conference Lodging Allowance will save $10 billion in FY2014.

But McBurney suggested the impact on the hospitality industry may not be too bad. “Only 10% of federal travelers took advantage of that allowance so it’s not a huge number.”

Hansen called the elimination of the conference allowance an “unfortunate” move, saying it might cost more in the long run.

“It’s not a simple situation. This might result in federal workers having to use transportation to get to a conference hotel or convention center and ending up spending even more; or not attending an important conference at all.”

Advisory committee
Looking ahead, said McBurney, the GSA will work with the advisory committee on other issues, including airfares and car rental to find best practices that might be adopted by the federal government.

The complete list of federal per diem rates can be found at www.gsa.gov/perdiem.