Potential cuts to the General Services Administration's per diem rates concern several travel industry lobbying groups, but officials said
they are making progress in communicating to government officials the potential
harm of such a move.
"I'm encouraged by the amount of support we've received
and am somewhat encouraged by receptive meetings with the GSA," said Shawn
McBurney, senior vice president of governmental affairs for the American Hotel
& Lodging Association. "There are thousands of hoteliers throughout
the country that are really concerned about this, and people are really
agitated. The outreach has been unprecedented."
The policy under proposal, McBurney said, would change the
way GSA calculates its per diem rates, including its standard rates and its
higher rates for most primary and secondary markets. Currently, GSA uses the
average hotel rate for each market, excluding the luxury and economy tiers, to
calculate its per diem rate. The new method also would exclude rates from the
upper upscale tier— Marriott's and Hilton's flagship brands, for example—from
the equation, effectively pricing those brands out for anyone staying on
government business.
The implications run far beyond government travel, as
companies that contract with the government often must adhere to the GSA rates,
and some travel buyers use them as benchmarking tools.
"Government contractors are just about the largest
corporations in the United States, so this spills over to the corporate
business," said Omega World Travel executive vice president Goran
Gligorovic. "This may affect pricing of hotels for the next year."
Although GSA is under a directive to curtail next year's agency travel by 30 percent compared with fiscal year 2010, the message
AH&LA, the U.S. Travel Association and other advocacy groups have sent to
Washington is that altering the per diem calculation actually could increase
travel costs. City centers in Washington, New York, Chicago, San Francisco and
other major destinations generally have a higher concentration of upper upscale
hotels than those in other tiers, so travelers might be unable to find a room
and have to stay well outside of the city, adding extra transportation costs,
McBurney said. Similarly, policies allow federal travelers to pay several times
the per diem rate for mission-critical travel, and such travelers unable to
find rooms outside of the newly restricted tier would be more likely to apply
for that exception and book an upper upscale property at a cost beyond even
previously acceptable rates, he said.
Starwood Hotels & Resorts Worldwide vice president of
North America divisional sales Betty Wilson said her company has been heavily
engaged in the issue, via lobbyists, AH&LA and U.S. Travel, and she is "cautiously
optimistic" about the results.
"We're more optimistic that all of the pieces are being
considered," she said. "We all get why the government needs to reduce
spending, but let's not have all of these unintended consequences."
Per diems are just one area of potential savings GSA is considering,
particularly following widespread criticism of lavishly expensive events such
as its 2010 awards ceremony, which cost almost $270,000. In a U.S. House
Transportation Committee update on Wednesday regarding the ongoing
investigation, chairman John Mica (R-Fla.) noted that more than 70 conferences
and award ceremonies are under review.
Gligorovic said it's clear why the per diems have emerged as
a cost-cutting target, however. GSA a few years ago tried to simply reduce
travel by 20 percent, but it proved impractical.
"Most of the government travel is not conventions but
are trips for educational purposes or disaster recovery," he said. "The
Centers for Disease Control guys have to go to Africa, or if a hurricane hits,
FEMA needs to go rescue people. If 20 percent of trips are cut, it would start
impacting missions."
The government also has excellent deals in place for air
travel costs, so it would be difficult to find savings there, Gligorovic said.
GSA likely will issue per diem rates in the coming weeks, as
the new rates take effect in October, the beginning of its fiscal year.
McBurney said AH&LA is not against GSA reducing travel costs or even
eventually changing per-diem policies but would like GSA first to take a more
meticulous look at it.
"The last time they looked at the methodology, they did
it as a collaborative effort, and it took eight months," he said. "Rather
than they make a rash decision, we'd prefer to talk with them about other ways
they might be able to reduce costs."