Business news from the Fredericksburg region.
Per-diem rates frozen for area hotels
BY CATHY JETT
Federal employees who check into Fredericksburg-area hotels in the next fiscal year will pay the same $88 rate as they do now.
That has local hoteliers breathing a sigh of relief. They’d feared the per-diem rate for work-related travel would be slashed as a budget-cutting measure.
The General Services Administration, which handles government purchases, had considered a controversial proposal to change the way it determines the rates it pays for lodging, food and incidentals.
Currently, the formula eliminates just the highest and lowest hotel categories to determine the per-diem rate for localities. One option would have excluded not only luxury hotels but a hotel-industry classification known as “upper upscale” in its calculations. Hilton, Marriott, Sheraton and Westin hotels fall into this category.
Many in the hotel industry feared that eliminating this category from the mix would have lowered per-diem rates by as much as 30 percent in some places, such the Washington area.
Instead, the GSA announced Wednesday that it will freeze per-diem rates, a measure that is expected to save the government an estimated $20 million, officials said in a statement.
“I was happy for the fact that it didn’t go down,” said Jennifer Childs, director of sales for the Hampton Inn & Suites and Homewood Suites near the Wegmans in Fredericksburg. “We had all kinds of plans in place if it was lowered.”
Area hotels get a lot of federal government business due to the three military bases in the region and the many defense contractors they attract. At the Hampton Inn & Suites and Homewood Suites in Fredericksburg, for example, federal employees account for about a third of all bookings.
“We get a good deal because of all the training facilities [at the bases],” said Childs, who is also treasurer of the Fredericksburg Area Hospitality Council. “It’s a pretty significant part of our business.”
GSA said that the decision to freeze per-diem rates is in line with an Office of Management and Budget memo that directed federal agencies to cut travel in fiscal 2013, which starts Oct. 1, by 30 percent compared to 2010.
“GSA is undergoing a rigorous review process to find ways in which we can streamline agency operations and save money across the government,” said acting GSA Administrator Dan Tangherlini in a statement. “By keeping per diem rates at current levels, we are supporting federal agencies in controlling costs and ensuring that taxpayer dollars are used wisely.”
Prior to Wednesday’s announcement, several legislators, including Senate Majority Leader Harry Reid (D–Nev.), had urged the GSA to make sure its reimbursement rates weren’t too low.
Karen Hedelt, the city’s Department of Economic Development and Tourism director, said the freeze will give the GSA more time to evaluate how it calculates per-diem rates, and if it wants to use a different methodology.
“The hospitality industry was questioning the need to change it,” she said.
No matter what the rates are, hotels are under no obligation to honor them. Several area hotels in Fredericksburg and Spotsylvania County stopped accepting the per-diem rate several years ago when it was the second lowest in the state. It was eventually raised.
The $88 per-diem rate for hotels in Fredericksburg and the counties of Caroline, Stafford and Spotsylvania, however, is still lower than that for Richmond or Washington, said Childs, who is also treasurer of the Fredericksburg Area Hospitality Council.
Richmond’s rate is $112, according to the GSA website. It ranges from $169 to $226 in the metro Washington area, depending on the month.
“For this area with all the military bases and government contractors here, we should have a much higher rate,” she said.
Cathy Jett: 540/374-5407