GSA Considering Per Diem Rate Cuts, U.S. Travel Association Claims - Business Travel News

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GSA Considering Per Diem Rate Cuts, U.S. Travel Association Claims

June 29, 2012 - 09:30 AM ET

By Michael B. Baker

The General Services Administration is considering significant cuts to its per diem rates in major travel markets as it seeks to comply with a directive to slash the agency's spending in 2013, according to travel industry insiders.

GSA deputy press secretary Dan Cruz said in a statement to BTN that as it reviews per diem rates for the 2013 fiscal year, it "will implement the directives in the Office of Management and Budget memorandum of May 11, 2012, concerning agency travel and conferences," which includes "decreasing spending on agency travel by 30 percent compared to fiscal year 2010."

"We will continue to engage our industry partners as we undertake this per diem rates review," Cruz continued.

U.S. Travel Association director of domestic policy Erik Hansen cited industry sources in claiming that review could "definitely put downward pressure on the per diem rates." In an action alert recently issued to members, U.S. Travel said current proposals include one that would cut per diems in major markets by as much as 30 percent. 

GSA issues both a standard per diem rate and special rates for more expensive markets—the latter comprising virtually all of the significant business travel markets in the United States—which shift seasonally. The current GSA standard per diem rate for lodging is $77, while the rate for lodging in Manhattan, for example, ranges between $204 and $295 throughout the year, and Chicago rates range between $130 and $190.

Large cuts to the per diem rates would affect the travel industry outside of just government travel, since many government contractors are required to follow the rates, and some private companies also base their per diems on the government rates.

As hotel rates are forecast to go up, not down, in 2013, lowering the rates would harm "the integrity of the formula," Hansen said. "The per diem is designed to reflect the midrange price for any market."

Per diem rates usually are released in late August or early September and take effect in October, and there is no indication the GSA plans to deviate from that schedule this year.

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