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Hotels ramp up competition for feds’ business

Jun. 8, 2012 - 12:58PM   |  
By ANDY MEDICI   |   Comments

Federal employees are cutting back on travel, thanks to tight budgets.

Travel experts say the recent conference scandal at the General Services Administration will press agencies to dial back even further on their travel plans.

The 2.5 million federal employees and contractors enrolled in GSA’s SmartPay charge-card program spent $2.89 billion on hotels in fiscal 2011 — down from $2.92 billion the year before.

Budget cuts likely will keep travel spending flat or even lower this year, experts say.

But experts predict federal travel plans also will likely be upended by the GSA scandal — in which hundreds of GSA employees attended a lavish $822,000 conference in Las Vegas in 2010. The spending made headlines last month and led to the ouster of top GSA leaders. Lawmakers held numerous hearings on the scandal and introduced several bills that, if passed, would reduce travel spending beginning next year.

Marriott — with hotel brands such as Marriott Hotels and Resorts, Residence Inn, Courtyard and Fairfield Inn — dominates spending at the top 15 hotel names frequented by feds.

But spending on Marriott hotels fell from a combined $581.4 million in fiscal 2010 to $576.9 million in fiscal 2011.

Feds have spread out their spending to a larger group of hotels as they seek more options and look for better deals, according to the data and experts.

Goran Gligorovic, executive vice president at Omega World Travel Inc., whose customers include the Justice and Treasury departments, said hotels are competing harder for federal business, which gives feds more options.

“You see more and more hotels trying to fit themselves into that marketplace,” Gligorovic said. “They have been really aggressive in seeking that business.”

A number of bills in Congress aim to impose deep cuts to federal travel. Among them:

• A bill passed by the Senate on April 25 would cut federal conference spending by 20 percent from fiscal 2010 levels. The measure would also cap agency spending on a single conference at $500,000, unless the agency is the primary sponsor. It also would require agencies to report four times a year on their conference spending.

• A bill by Rep. Dennis Ross, R-Fla., would cut agency travel budgets by 50 percent in 2013 and 2014 and by 75 percent in 2015 from 2012 levels.

• A bill by Sen. Claire McCaskill, D-Mo., would cut conference spending and require more detailed reporting by agencies. The Accountability in Government Act would cap spending on any one conference at $200,000 unless approved by the head of an agency.

Sen. Jeanne Shaheen, D-N.H., sent letters May 1 to all 15 Cabinet-level agency inspectors general requesting audits of all conference spending.

“The scale of GSA’s wasteful spending and the participation of the agency’s leadership in creating a culture of excess necessitate that we ensure conference expenses in other federal government agencies are entirely appropriate and necessary,” Shaheen said in the letter.

Gligorovic said the legislation is dangerous because it does not lay out any methodology for how to reduce spending or deal with less conference travel.

He said the legislation also does not lay out alternatives for annual training credits that many federal managers must get for their positions.

Agencies may try to reduce spending by shifting conferences to cheaper locations, Gligorovic said. The next step would be to cut the number of travelers to a conference to cut costs.

Rick Singer, executive director of the Society of Government Travel Professionals, said the legislation would have a significant impact on conference travel. Agencies are probably going to start holding meetings and conferences in federal facilities instead of hotels, he said.

Another reason agencies are dialing back on their travel spending: a 2011 presidential executive order that directs agencies to cut a cumulative 20 percent below fiscal 2010 levels from travel, information technology costs and promotional materials.

Travel is allowed only for enforcement inspections, diplomatic missions or when the activity can be performed only by allowing travel, according to the order.

Singer said the raft of legislation is an overreaction to the GSA scandal as lawmakers in Congress run for re-election.

“They take one incident and they politicized it to be able to bring it up repeatedly in an election year,” Singer said.

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