Despite recent cuts, federal government travel remains integral to the hotel industry. It is especially important in communities around military bases and other federal government hubs, where hotels have opened expressly to meet the needs of government travelers and their families; these hotels and others support tens of thousands of jobs and billions of dollars in travel spending.
The federal government’s per-diem rate is the daily amount reimbursable for lodging while on official travel. The U.S. General Services Administration (GSA) historically calculates this rate based on hotels’ average daily rate from the previous fiscal year, less 5 percent, and announces the rate for the coming year in mid-August. Hotels are not the only industry that watches for this announcement; many private companies, as well as state and local governments, peg their own travel reimbursement rates to the federal level.
Fair per-diem rates for hotels are a constant priority for AHLA’s advocacy team. The GSA’s traditional formula for setting them proved unworkable in the immediate aftermath of the COVID-19 pandemic, when so many hotels were forced to slash their room rates; AHLA argued successfully for the GSA to hold per-diem rates for FY2021 at pre-COVID levels, where they remained through FY2022. GSA adjusted rates upward for select markets in FY2023, but after AHLA met with the GSA to highlight the lingering effects of inflation and the industry’s workforce shortage, nightly lodging rates rose by $9/night for FY2024 and $3/night for FY2025.
This year, against the backdrop of strict new controls on federal government travel, it seemed possible that the GSA would lower per-diem rates without regard to economic realities. AHLA made the case not only directly to the GSA but also to legislators on Capitol Hill: in the face of rising costs for everything from supplies to labor, local economies would suffer if per-diem rates declined. Per-diem rates, set correctly, lead to more stable employment and the creation of new jobs. They empower the private sector and foster economic growth.
Ideally, the federal government per-diem rates would reflect the reality that many hotels are facing, as the costs of labor, operating supplies, maintenance, property taxes, and insurance outstrip inflation rates. Instead, the GSA announced in August that per-diem rates would remain at FY2025 levels: a total of $178/day for the continental United States, comprising $110 for lodging and $68 for meals and incidental expenses.
In light of cuts to government travel, we were pleased to see that the per-diem rate was not decreased. However, GSA’s decision to keep per-diem rates flat this year will ultimately strain a hospitality industry that is already scrambling to prepare for next year’s influx of visitors for global events such as the FIFA World Cup and USA250. A thriving hospitality sector is in the public’s best interest. AHLA will continue to make the case with Congress and the GSA for per-diem rates that reflect hotels’ rising expenses.