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Hotel spending could dip 20 percent

Sep. 7, 2012 - 02:55PM   |  
By SARAH CHACKO   |   Comments

Federal agencies spent less on hotels in 2011 than in the previous year and are likely to spend even less in 2012.

Agencies’ spending on hotels dropped more than 7 percent last year, from $308 million in 2010 to $285 million in 2011, according to figures from the Federal Procurement Data System.

Federal spending on hotels for the first three quarters of 2012, at $171 million, is about $44 million less than for the same period in 2011. If agencies spend at the same rate in the final quarter as they did in the first three, the government will finish fiscal 2012 having spent $57 million less on hotels than in 2011, a 20 percent decrease, according to Federal Times analysis.

The FPDS figures reflect contracts that agencies award to hotels for lodging and do not include spending through the General Services Administration’s Smart Pay charge card program, which has about 2.5 million cardholders across the government.

Experts say the decrease in hotel spending is in large part because of budget cuts, increased scrutiny of travel spending and directives from the Obama administration to reduce travel spending.

The president in a November executive order directed agencies to reduce spending on travel and conferences 20 percent below fiscal 2010 levels by fiscal 2013. Agencies had already taken steps to reduce travel spending, the executive order said. For example:

• The Internal Revenue Service planned to spend 27 percent less on travel in 2012 by using teleconferences and webinars as an alternative to travel to conferences and training sessions.

• The Energy Department predicted $15.7 million in savings by reducing the number of conferences, using video teleconferencing and issuing cheaper, nonrefundable airline tickets when possible.

Agencies further canceled conferences and increased oversight of travel spending after news broke in April of a 2010 GSA conference in Las Vegas that cost $823,000 and forced out the agency’s top leaders.

The Office of Management and Budget then increased the required reduction on travel spending to 30 percent below fiscal 2010 levels by fiscal 2013. The guidance also banned agencies from spending more than $500,000 on individual conferences except under unusual circumstances. Starting in January, agencies must also publicly report on all gatherings in the preceding fiscal year that cost more than $100,000.

“Agencies are cutting back or being more selective about where they’re going or how often they’re going,” said Justina Treventi, business development manager for Site Solutions Worldwide, which coordinates travel and lodging for agencies.

Hotels are feeling the impact as agencies cancel or reduce the size of their conferences, industry experts said. But at the same time, the general public is traveling more and commercial rates are increasing, said Shawn McBurney, senior vice president of governmental affairs for the American Hotel and Lodging Association.

That means hotels may be less willing to accommodate government per diem rates, which have been frozen for 2013, if they have high demand from a commercial market willing to pay more, McBurney said.

But hotels view the government as a good partner and are willing to work with agencies to accommodate their travel needs, he said.

“A lot of the meetings are valuable and necessary, and there are guidelines to ensure those aren’t wasteful,” McBurney said. “Hotels are always happy to work with agencies to get the best deal possible.”

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