One quality that separates a journalist from a writer is the ability to look at issues objectively. As the saying goes: There are always two sides to a story. A good journalist is groomed to explore each one equally when addressing a topic.
The HotelNewsNow.com editorial team prides itself on looking at issues affecting hoteliers through the same lens, however popular or unpopular an issue might be with our collective niche audience.
The team has been following closely during the past month the U.S. General Services Administration’s plan to address government traveler per-diem rates in fiscal year 2013. Changes in per-diem rates have an obvious widespread effect on the success of many individual hotels and on the industry as a whole. Therefore, we found it incredibly important to inform our readers of what the GSA was considering.
Last week, the site broke news that the GSA decided to table a new methodology that would have led to sharp decreases in the per-diem rates and instead chose to freeze the current standard and non-standard rates for fiscal year 2013.
It was considered a win for many organizations, including some hotel owners and operators in high-government-traffic markets and a number of lobbyist organizations who went to bat for the industry. Overall, per-diem decreases would have meant less overall revenue coming into the industry as a whole, and I congratulate the efforts of all the organizations that got involved, waved a flag, grabbed the attention of the GSA and accurately reminded the government how important the travel and tourism industry is to the country’s overall economy.
But today I’d like to present the other side of that coin.
When I first heard about proposed changes to the per-diem methodology, I have to say I viewed it not as a loss of demand but more as a shift in demand. Lower per-diem rates, in my opinion, would shift business to lower-rated hotels. For example, maybe government travelers wouldn’t stay in a full-service Crowne Plaza but instead would stay in a nearby Holiday Inn. One owner loses out on some lower-rated business, but another owner picks it up.
Also, I must admit, I find it somewhat ironic that after years of pontificating about optimal cost-cutting strategies, cross-training and labor-management tools, hoteliers aren’t more appreciative of the U.S. government attempting to control its own budget. Companies had to make cuts, and now the government has to do the same. Many hoteliers are quick to trash-talk government spending and call for a new administration with more consideration for the U.S. budget, but when it comes to spending that might affect our business, they should continue shelling out those dollars. Shouldn’t we really be applauding the U.S. government’s efforts to reduce spending?
Some hoteliers argued that lowering per-diem rates would actually increase spending for government travelers because they would be forced to stay farther away from their destinations and spend more on transportation. To me, that’s a pretty clear attempt to put a spin on the issue in attempts to beef up the argument. In any group-business destination that would be affected by lower per-diem rates, there are plenty of lower-rated hotel options within walking distance. Remember, the per-diem rates still would be market specific and still would take into account the average daily rate of hotels in that respective market, just not the hotels considered at the top of the chain scales.
Finally, I’m left wondering why the hotel industry looks at government business differently than other groups or organizations that spend money in hotels. If IBM, for example, were to reduce its travel budget and look for rooms at a lower cost, would the industry have reacted the same way? I’m sure not. Instead, I think hoteliers would have quietly found a way to accommodate the group business, whether it be negotiating new terms or directing that business to a sister property that would better suit the company’s needs.