Government Hotel Rates: By Not Spending More, You Save!

The GSA has had a bunch of scandals recently. But they really, really want you to know that they are trying to contain costs.

Fortunately, I translate their releases to make them more plain-spoken for the intelligent lay-person.

As part of our top to bottom review of GSA, we have been looking for savings in our government-wide travel programs. Each year, GSA sets the federal government’s travel reimbursement rates for lodging, meals, and incidentals for official government travel. For the first time in more than a decade, we decided to freeze the rates at current levels.

In other words, we were looking at ways of saving money on travel. But we decided not to move forward with any of them. Instead, we punted. (And since we’re doing such a great job in travel, you can trust that we’re just as good everywhere else, too, so could ya stop looking so hard at us?)

This will help federal agencies save an estimated $20 million in avoided costs in Fiscal Year 2013.

By not spending more, we spend less!

This is in line with President Obama’s Campaign to Cut Waste and the Administration’s directive to reduce travel spending by 30 percent.

Except that it isn’t, since the Administration directed a reduction in travel spendng by 30%. And GSA decided not to move forward with any cuts.

While we considered a number of proposals to drive savings through the GSA per diem lodging rates, we needed more time to undertake a comprehensive review of the methodology used to determine those rates. We need better data to make sound decisions. Freezing the rates now was the most pragmatic approach that achieves significant savings while also allowing us more time to further evaluate the rates. The next step is for us to meet with experts through a Federal Advisory Committee and develop a plan for the rates moving forward.

We wanted to reduce travel costs (really!) but the industry — through its lobbyists and through Members of Congress, let us know that was unacceptable. Now we’ve convened an Advisory Committee to formally bring those interests into the process.

Per diems are just one avenue through which GSA is reducing travel costs for agencies. Recently, we proposed to eliminate a policy that allows employees who attend a federal government sponsored conference to spend 25 percent above the per diem rate. Through this action, we will save approximately $9 million a year. We are also moving towards more cost-effective travel solutions, including launching the next generation of electronic travel service, beginning a pilot project for GSA’s online hotel booking program (FedRooms), and renegotiating contracts with airlines to offer discounted rates for federal employees.

We save money by ‘launching the next generation of electronic travel service’ instead of, you know, licensing things that exist. And we’re re-negotiating airline route contracts, like we do every year. By the very nature of the contracts.

GSA is also in the process of meeting with over a dozen agencies to identify areas where we can help drive savings government-wide, including in the area of travel.

The solution is more meetings!

Our work has just begun. GSA will continue to identify and launch new approaches to travel, fleet, contracting, IT and real property that will drive savings and improve government’s overall efficiency.

Somebody has to protect our phoney-baloney jobs!

Look, I’m not claiming to know the ‘right’ amount to spend for any given employee on any given trip, and if that’s the charge that an agency is given it’s really hard or impossible. But don’t take on a project to cut costs, decide not to move forward with it, and send out a release patting yourself on that back for a job well done…

For more on GSA’s decision not to cut spending as they had intended, see this discussion from last week.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community Milepoint.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. Gary,
    Has to be one of your best analysis ever! A committee should be formed to further analyze this post, and to make recommendations on future post….

  2. Gary,

    Sometimes I think the politicos take too much heat for their claims that spending less than planned is actually saving something.

    If you assume that everybody expects every cost to rise with inflation, then costs/spending that rises at a lower rate is actually money saved.

    Take my paycheck for example — while not a “cost” to me, I expect it to rise with inflation. For the first two years at my job, I got no raise while my rent, medical expenses and food costs went up. Two years later, I very much felt that I was being paid less. While my paycheck did not in fact decrease, my buying power did. My employer could (although they didn’t) argue that they “saved money” on salaries that year because they didn’t increase them.

    Whether or not I received a paycut is splitting hairs. Is there any true difference between the scenario I outlined above, and one where all other costs did not increase but I received a true paycut? Both times, I had less buying power than I did the year before. Does the label really matter?

    All that is to illustrate that the federal government can legitimately reduce costs by spending less. (Assuming that the plan they put forth was feasible in the first place.)

  3. Inspired by our great government officials, I offer a better way to reduce travel cost immediately.

    trvl cst

    We just removed 3/10 of the letters and achieved an instant 30% reduction.

    Job done – now gimme a Nobel!

  4. Great stuff Gary. It takes such nerve for them to say we were told to cut 30% and we did not cut a dime- so look how we saved $20mm!! Love to see how that would work for them in the real (private sector) world.

  5. FWIW, I’m booking a stay at a DC area hotel in October. I checked the “Government Rate” (I am a Gov employee) $399 for King. Amex FHR rate with $100 F&B credit? $259.

  6. @Andyandy – that ‘government rate’ is clearly above the per diem and would not be covered without an exception that may be hard to get…

  7. I have a lot comments on this issue, but I’ll be brief. I am DoD contractor. I deal with the per diem issue all the time. I truly believe that by lowering (or freezing) the per diem lodging rates raises the amount spent on travel. Why? Well, hotels are not required to offer government rates. And by setting these rates artificially low, it reduces the amount of rooms available at that rate. And, when rooms are not available at the government rate, people are allowed to go over the per diem. So, fewer rooms at the government rate means more nights at a higher rate. The feds need to set their rates at reasonable levels in order to control costs better.

  8. Gary,

    Don’t you think this is a tad misleading? Yes, GSA sets the per diem rates for government travel, but each individual agency has their own travel budget. You *cannot* determine whether the federal government has reduced its overall travel spending without viewing data from each agency.

    In short, the fact that GSA did not reduce per diem rates is not indicative of much.

  9. @Chris – sure the cost of an individual trip is only one factor, since the # of trips could either rise or fall. But *GSA* is claiming to be reducing costs. By not changing the cost of a trip. When what they did is BACK OFF OF THEIR COST-CUTTING INITIATIVE which had been underway, but got scuttled due to pushback from the hotel industry (and through Members of Congress that had been enlisted in that fight).

  10. Chris is absolutely correct. The agency where I work had a huge cut in travel expenses this year, and we expect another one next year. There are a few things that the GSA could do with per diems to cut costs (international rates are often higher than necessary), but our agency has implemented strict rationing of travel this year.

  11. why not axe the GSA, and replace them with an army of Garys who can take a travel requirement, and squeeze every bit of value out of it? The taxpayers would be getting a huge savings that way.

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