Gov't Raises Room Per Diems

The General Services Administration late last month released per diems for government travel beginning Oct. 1, increasing hotel allowances in about 60 percent of 420 domestic locales even as the cost of lodging in most of the government's top 50 markets declined. In the 10 most popular federal lodging locations, the average per diem for lodging will decrease by more than 5 percent.

Government contractors have been the largest corporate adopters of the per diem rates, yet Management Alternatives consultant Carol Salcito said the rates offer a benchmark for many corporations. "Many companies do look at them kind of as a guide," she said.

Meanwhile, the federal government increased the standard lodging amount for destinations in the continental United States where per diems are not fixed to $60 from $55.

According to John Sindelar, the deputy associate administrator for the Office of Governmentwide Policy, the $55 per diem rate had been in place since 1999, and a recent "review of lodging average daily rate cost data and the consumer price index indicates the standard lodging per diem rate should be updated to provide for the adequate reimbursement."

Lockheed Martin Corp., the largest U.S. government contractor, like other such contractors relies heavily on GSA rates as the basis for its hotel negotiations. Frank Melesky, Lockheed Martin travel commodity manager for global hotels and groups and meetings programs, said 90 percent of the company's preferred properties have rates that "are at or below the GSA per diems."

"Lockheed Martin's business comprises a substantial number of cost reimbursable contracts with the U.S. government," Melesky added. "We therefore place significant importance on per diems when we negotiate our preferred rates with the hotel companies. Per diems serve as the driving benchmark for our negotiations."

The governmentwide per diem advisory board—a group of government travel executives, lodging purveyors and other travel professionals—advised GSA to use average daily rates for the first time to determine the cost of lodging. Historically, GSA hired an independent contractor to conduct an annual survey of roughly 500 U.S. locations, which entailed directly contacting the properties in the designated location.

"The travel experts' recommendation to base federal lodging rates on actual rates, provided by the industry, produces the most accurate lodging rate information available," GSA said in a statement.

Yet, the per diem rates lend little support to travel managers trying to forecast lodging costs for 2005. "The GSA per diems tend to be derived more from prior years' data versus industry forecasts," Melesky said. GSA said it used average daily rate data from 2002 and 2003 to determine the lodging per diem rates for 2005.

However, companies still look toward the GSA rates as an indicator. Consulting firm Runzheimer International and BTN's annual Corporate Travel Index are the only other sources of per diem data available to the industry.

GSA's per diems cover only locales in the continental United States. The U.S. Department of Defense sets travel per diem rates for non-continental U.S. destinations and "overseas non-foreign areas" and the U.S. Department of State sets rates for international travel.