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GSA considering sharply lower per diem rates, industry sources say

Jul. 5, 2012 - 06:17PM   |  
By ANDY MEDICI   |   Comments
Checked baggage is unloaded at O'Hare International Airport in Chicago. GSA is considering lowering lodging per diems by as much as 30 percent, according to officials familiar with the proposal.
Checked baggage is unloaded at O'Hare International Airport in Chicago. GSA is considering lowering lodging per diems by as much as 30 percent, according to officials familiar with the proposal. (Scott Olson / Getty Images)

Feds may see sharply lower per diem rates when they travel beginning in October.

The General Services Administration is considering lowering lodging per diems by up to 30 percent, say travel industry officials familiar with a GSA proposal.

GSA recently discussed with travel industry officials the possibility that it will revise how it calculates average per diems by removing more costly hotels from its averages — lowering the resulting per diem.

Lower per diems would mean fewer choices for federal travelers, said Shawn McBurney, senior vice president of governmental affairs at American Hotel and Lodging Association, who is familiar with GSA’s proposal. He estimated that about 85 percent of Washington, D.C., hotels charge rates that would exceed per diems if GSA uses the new methodology.

Roger Dow, president of the U.S. Travel Association, which represents hotels, airlines and other travel-related industries, said the GSA proposal is part of a broader reaction to wasteful spending at an $823,000 Western Regions Conference in Las Vegas in 2010. An April inspector general’s report on the conference led to the ouster of GSA’s top leadership, numerous hearings in Congress, legislation aimed at curbing travel spending and a top-to-bottom review of the agency by GSA’s new acting administrator, Dan Tangherlini.

A GSA spokesman declined to confirm or deny whether the agency is considering a new methodology to calculate per diem rates. He said the agency is following an Office of Management and Budget directive to reduce travel spending by 30 percent in fiscal 2013 compared to a 2010 baseline.

Agencies would have to maintain that level of spending through the end of fiscal 2016, according to a May 11 memo by OMB.

“The federal government is looking to cut costs across all categories of spending, and travel is no different,” said Erik Hansen, director of domestic policy at the U.S. Travel Association. He said the organization is working to determine how many hotels federal travelers could lose access to as a result of the proposal.

McBurney said Marriott and Sheraton would be among hotel chains most affected. Feds could be priced out of many hotels in more expensive markets, such as New York, San Francisco, Chicago and Baltimore, in addition to Washington, he said.

“We don’t think this is the wisest course,” McBurney said.

Scott Lamb, director of the government segment for Hilton Worldwide, said a large drop in per diem rates would mean fewer hotels for federal travelers in urban centers — where federal facilities are typically located.

Feds would have to stay at hotels further away and either rent a car or spend more time and money on alternative transportation, he said.

Instead of across-the-board cuts to travel spending, agencies and Congress should work on reforming travel systems and find ways to reward agencies for smart reductions in travel spending, he said.

“This is more like the tail wagging the dog,” Lamb said. By chopping the per diems and by mandating budget cuts of 30 percent you haven’t really looked at how to improve the travel system or make it more economical.”

In a letter to U.S. Travel Association members, Dow said the organization would meet with GSA, OMB and lawmakers to “offer sensible alternatives.”

The organization is also encouraging its members to call GSA regional administrators to share their concerns about the proposal.

GSA will continue to work with the travel industry as it conducts its annual review, according to the agency.

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