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Thursday, October 7, 2010Thursday, October 7, 2010
2:00 2:00 –– 3:00 PM EDT3:00 PM EDT
Make Government Per Diem Rates Work Make Government Per Diem Rates Work
For You For You –– Selling the SegmentSelling the Segment
Overview of Format and TopicOverview of Format and Topic
Webinar Moderator
Fran Brasseux
Executive Vice President, HSMAI
POLL QUESTION #1POLL QUESTION #1
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this webinar at your location today?
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TodayToday’’s Presenters: s Presenters:
Steve Hood,
Senior Vice President,
STR
Denise Benyak, CGMP,
Global Sales Director, Wyndham Hotel Group
Ron Loman,
Director of Field Sales,
Crestline Hotels
Jill Denning,
Program Manager,
Per Diem Program, Office of Governmentwide Policy,
U.S. General Services
Administration
Office of Governmentwide Policy
GSA’s Per Diem Rate Setting Process for the Continental United States
October 7, 2010
Travel Management Policy Office of Travel, Transportation and Asset Managem ent
6
What We Will Discuss
• GSA’s Role
• Lodging Methodology
• FY11 Rate Results/Statistics
• Special Review Process
7
What is included in Per Diem?
Per diem rates include the following reimbursement allowances for Federal travelers:
• Lodging
• Meals: Breakfast, lunch and dinner
• Incidentals expenses: Fees and tips
(excluding tips for taxis, airport shuttles,
etc.)
8
Who Sets Per Diem Rates?
Continental US (CONUS)
TERRITORIES, and Alaska, Hawaii
FOREIGN
GSA Dept. of Defense Dept. of State
Standard Rate
Non-Standard Rate
9
Types of Lodging Rates
• Standard Rate• The base rate for per diem in the continental United States
• Increased in FY 2011 from $70 to $77• Applies to 2,600 counties
• Non-Standard Rate Areas (NSAs)• Unique areas identified by Federal agencies greater than the
Standard Rate
• Applies to 378 unique locations
GSA’s Authority to set Per Diem
In accordance with 5 U.S.C. 5702, GSA sets per diemrates to fairly reimburse Federal employees for their expenses while traveling to achieve their agencies’missions.
5 U.S.C. Section 5702 (a)(1)(B) states that employe es are entitled to “… reimbursement for the actual and necessary expenses of official travel not to exceed an amount established by the Administrator [of GSA] fo r travel within the continental United States…”
10
Per Diem Methodology
Primary ZIP Codes
Mid-Range Priced Properties
FEMA Fire Safe Properties
11
11.5K+ properties used; average 25 each NSA
Per Diem MethodologyStandard CONUS Apply
NSA Run
NSA Apply
12
13
Per Diem Methodology
• Only data of hotels/motels; no condos, dorms, B&Bs, cabins
• No weekend travel rates
• Data used: April – March
14
Lodging Per Diem Process
Identify area and primary ZIP codes
Use updated Fire-Safe hotel list
Obtain hotel industry
data: Average
Daily Rate
Analyze hotel
industry data
Seek/obtain GSA senior
managementconcurrence
Seek/obtain OMB senior
management concurrence
Notify Congress of
FY rate change
Publish FY per diem
rates
15
Methodology Example
Economy $132 outside of rangeMidscale $154Midscale $162Independent $227Upper Upscale $227Upscale $230Luxury* $237* usually outside of range
Average Daily Rate $200Lodging Per Diem Rate $190 less 5%
Mid-P
rice Range
Location of 378 Non-Standard Areas16
US Average Daily Rate Data
$108.81
$108.11
$99.95
$96.86
$99.41
$93.96
$94.08
$97.57
$98.37
$99.14
$90
$95
$100
$105
$110
FY 2010 Data FY 2011 Data
17
US Average Daily Rate Data: Jan. 2000-July 2010
18
76.31
110.25
99.14
$75
$80
$85
$90
$95
$100
$105
$110
$115
Current Methodology
Started Oct 2005
Lodging Rate Changes - NSAs
FY 2011• 82 percent of the rates decreased
FY 2010• 70 percent of rates remained the same or
increased
FY 2009 • 94 percent increased, 2 percent were
unchanged and 4 percent decreased
19
FY10 Per Diem Lodging Rate Changes
20
Agency Flexibilities
• Actual Expense Allowance
• Agency approval• Up to 300% of per diem • Agencies discretion
FTR reference: 41 CFR §301-11.300 to 11.306 (www.gsa.gov/ftr)
21
Agency Flexibilities
• Conference Lodging Allowance (CLA)• Up to 125% of lodging per diem rate to attend or plan conference (government agency sponsoring conference determines amount)
• Federally sponsored
FTR reference: 41 CFR §301-74 (www.gsa.gov/ftr)
22
Requests for Per Diem Reviews
Federal Agency Travel Manager notifies GSA of their travelers’ difficulties in finding rooms at the current per diem rate. The letter should include:
• Number of trips annually in specific location• Address, ZIPs & rates where they need to stay• Frequency actual expense used
23
Requests for Per Diem Reviews
• Requests postmarked by 12/31
• See www.gsa.gov/perdiem FAQs #5 and 6
• Rates can increase/decrease/remainunchanged
24
Additional Resources
Questions: [email protected]
E-Mail Notification:www.gsa.gov/travelpolicyemailnotification
Websites:gsa.gov/perdiemhttp://www.usfa.dhs.gov/applications/hotelhttp://www.twitter.com/GSAtravelpolicy
25
Point of Contact
Jill Denning Per Diem Program Manager
(202) 208-7642 [email protected]
26
ADR Update
Steve HoodSenior VP Research
Smith Travel Research
Making Government Per Diem Rates Work for You
Total US - Key Performance IndicatorsAugust YTD 2008, 2009, and 2010
2-yr diff: -4
2-yr diff: -$10
2-yr diff: -$10
2010 Smith Travel Research, Inc.
Year-to-Date ADR still going down
Total US – Historic ADR Percent ChangeTwelve Month Moving Average – Jan 1989 to Aug 2010
-8.8% (Jan 10)-3.4% (Aug 10)
-4.7%
0.1%
2010 Smith Travel Research, Inc.
ADR growth (Running 12-month) turning around
Total US – Current ADR Percent ChangeMonthly Numbers – Jan 2005 to Aug 2010
4 months of positive ADR percent change numbers
Total US – Historic ADR Actual ValuesTwelve Month Moving Average – Jan 1997 to Aug 2010
2010 Smith Travel Research, Inc.
Lots of ADR ground to make back up; how long will i t take?
Scales – ADR Percent ChangeAugust YTD 2008, 2009, and 2010
2010 Smith Travel Research, Inc.
Heaviest discounting at upper end, Luxury only posi tive
Locations – ADR Percent ChangeAugust YTD 2008, 2009, and 2010
2010 Smith Travel Research, Inc.
Urban largest ADR drop in 2009, only positive in 20 10
US Regions – ADR Percent Change August YTD 2008, 2009, and 2010
2010 Smith Travel Research, Inc.
Mid-Atlantic positive, New England and WN Central f lat
Total US Group versus Transient - ADR % Change Running 3 Month – Jan 2007 to Aug 2010
2010 Smith Travel Research, Inc.
Transient ADR dips first and farther, returned posi tive in early 2010
Total US - ADR by Day of Week August YTD 2008, 2009, and 2010
2010 Smith Travel Research, Inc.
ADR gap even for every day of week, not so with Occ upancy
615-824-8664 ext. 3315
www.strglobal.com
38
Ron Loman,
Director of Field Sales,
Crestline Hotels
39
What do I do now?
• First, change all future
government reservations, both
transient and group.
• Adjust your forecast as well
– it’s more important than
ever that we supply owners
with accurate forecasts.
40
Be strategic and
identify future need dates now so that you
can communicate with
your government
clients and secure
those meetings when you need them.
41
On the group side, know that
most government entities
must get approval, but they
can spend up to 125% more
than per diem for meetings.
42
Always take a look when you have
those holes or sudden group
cancellations.
Often we are quick to open Priceline and Hotwire at rates lower
or equal to the per diem.
The government customer is a good
business travel client – remember,
government clients are usually
loyal, and if you take care of them
they will always stay with you … vs.
a Priceline or Hotwire customer
who is loyal only to a lower rate.
43
Take a look at the value adds that
you have given in the past. Have
you rolled in parking or breakfast?
Could you readjust your value
adds by NOT including them,
which would make the new per
diem rate more profitable –
allowing you to take a few more
room nights?
44
Denise Benyak, CGMP
Global Sales Director
Wyndham Hotel Group
45
Honor your contracts – if
your per diem rate has
decreased, it may affect
your hotel and/or chain if
you decide to cancel the
group.
46
SGMP and SGTP Memberships –
Become a member and participate. Planners
who are members have a tendency to work with
members. The organizations can also assist in
working with your CVBs to maintain or increase
per diems in future years for your destination.
47
State Government Per Diem Rates –
Usually less than the Federal Government Per Diem
48
Back-yard business? It
is critical that you
know the agencies in
your own city. Are
you on these
preferred agencies
vendor lists?
49
FedRooms – Launched Groups &
Meetings this year, a free sourcing
service through Cvent for
government meeting planners.
www.fedrooms.com
Questions? Questions?
Steve Hood,
Senior Vice President,
STR
Denise Benyak, CGMP,
Global Sales Director, Wyndham Hotel Group
Ron Loman,
Director of Field Sales,
Crestline Hotels
Jill Denning,
Program Manager,
Per Diem Program, Office of Governmentwide Policy,
U.S. General Services
Administration
Upcoming Webinars:
October 26 – Source, Segmentation, Channel: Session 8 of our Revenue Management Series. Segmentation is one of the key elements of revenue management,
but what does segmentation really mean? This webinar will help you to develop an effective
revenue strategy that includes understanding which segments have demand, which segments you want, which segments are realistic to capture, and knowing where and how each segment books.
November 4 – Google Instant: Make it Work For You: Google recently launched the next generation of search…Google Instant. In this webinar you will learn:
• How will Google Instant impact your rankings • How this will affect your SEO strategy
• Implications with Google Adwords
• What actions you should take now
To register for these and more, please go to
www.hsmaiuniversity.org.
The Evolving Dynamics of Revenue Management:
A Comprehensive Revenue Optimization Road
Map for Hotel Owners, Operators and
Practitioners
By Kathleen Cullen & Caryl Helsel
Published by HSMAI Foundation in partnership with the HSMAI
Revenue Management SIG Advisory Board and TravelCLICK
Revenue Management has continued to grow as a science and an art over the past several years in many
industries, and especially in the hospitality industry. On the most fundamental level, the basis for success is
to have the right revenue management organization in place to support the revenue strategy. A solid
understanding of revenue management is critical throughout an organization, from top to bottom. This
HSMAI Foundation publication brings you and your property the very latest information on understanding the market, market segmentation, forecasting, revenue strategy, pricing, inventory control strategies, and
performance analysis. Included are a plethora of case studies to help you optimize revenue at all levels.
Order today at www.hsmaipublications.com.
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