Following the GSA’s (General Services Administration) spending spree scandal, the federal government
has suddenly become engrossed with pursuing policies that will drastically decrease travel budgets for all
agencies across the board. In addition to claiming to reduce the physical act of traveling, the GSA is also
considering revisions to its methodology for calculating the annual lodging per diem rate.
During a time where our government is already imposing so much pressure on small businesses, making
it far more expensive to simply do business, it now decides it is a good idea to create a rigged system to
produce even more downward pressure on rates that are still below 2007 levels is not only outrageous, but
borderline criminal.
When I saw the pictures of that prosecutable moron sipping champagne in a Vegas Strip bathtub, I
thought those of us in my profession as a hotel general manager, who have had to completely re-learn our
profession these past four years, while being scrutinized for every dollar we spend even as these guys are
getting paid to party. Are you kidding me?
Now these same people, who are pretending to reform themselves, are actually paying for their
digressions on the backs of those of us who are simply trying to make an honest living. It is amazing to
me that the GSA is earnestly considering implementing policies that will in fact punish hotels and their
employees as repentance for their own bad behavior.
Historically, per diem rates are intended to reflect, not institute, average room rates in established markets
across the country. The GSA incorporates average daily rates from the “mid-price range” which are
rates from, midscale, upscale and upper upscale properties. Then the GSA usually omits rates from the
very bottom and very top hotels from the data as they are considered “outside” the mid-price range.
The current methodology already sets per diem rates 10-20% below the real markets’ rates, already
establishing a significant discount for local, state and federal governments.
The problem with the proposed methodology is little more than semantics. Redefining what the very top
hotels are by taking out full service Marriott’s and Hiltons for example, from the calculations will provide
an artificially depressed market rate. These are not luxury properties, but traditionally standard business
hotels with meeting space and catering services. Consequently, the idea of a corporate traveler staying in
an upper-upscale hotel makes it seem like they are staying in some lavish property, but really they are just
business-class hotels built specifically to accommodate this market segment.
It is hard for me to believe no one at the GSA understands how lodging markets are segmented. We are
not trying to get $250 per night from the government, but we do need a fair rate so we can maintain the
type of properties that are clean and safe for all of our guests. With the already high cost of developing,
branding, honoring loyalty programs and even providing breakfast, there is not only little to no profit at
$77 per night, but we will soon undoubtedly be paying our own government employees to stay with us.
Everything I have read concerning this matter predicts the GSA’s redefinitions will reduce per diem rates
in almost every major travel market by more than 30 percent. This flawed policy will also have a long
lasting economic influence on not only government and business travel; it will further retard this already
timid economic recovery.
The travel and tourism industry in the United States generates more than $1.5 trillion in economic activity
and supports almost 8 million real jobs. Why would anyone want to break that?
There are over 200 hotels in Sevier County. Let’s recruit Senators Alexander and Corker to help us out
with this. There is no end to this crazy government and we must remind these people that in America, the
government belongs to us. We do not belong to the government.
