Demystifying Government Per Diem

With the new Government Per-Diem rates recently released, now seems as good a time as any to discuss the often misunderstood Per Diem rate.

Just to clear up any confusion about the Per Diem there are several things you should know:

There are two forms of Per Diem: Lodging Per Diem and Meals and Incidentals Expenses (M&IE). If you can charge the full Per Diem at your property, don’t worry that you are keeping someone from using their Meals and Incidentals Per Diem, as it’s separate entirely!

Many hotels find that their Per Diem is above a rate that they would normally charge for a nightly room rate. For example, some Per Diems at my hotels in the Northeast are in excess of $120. This is at hotels that often offer rates such as $109 on soft shoulder dates like Thursday and Sunday. In this instance it is perfectly acceptable to offer a government rate that is less than Per Diem. In this case the guest/government employee would return the difference to the government.

Often confusion arises between the different types of government stays. There are State Government Employees, Federal Government Employees, Active-Duty Service members, Former Military Members, and all sorts of guests who will be tangentially associated with a Government entity, and often expect a discounted rate for their stay. This is fine, but can be problematic when the Per Diem rate is mistakenly used as a blanket rate for guests who mention that they have a government association. It can help to build out and utilize multiple government/military/Per Diem rates and yield them appropriately.  Also, train your front desk to avoid offering a Per Diem rate to a gov’t contractor or military family member and offer the correct rate codes instead.

Per Diem Rates should be the most regulated and fenced. Guests should be able to prove that they are staying at the property on instruction from either the State or Federal government and have the proper identification as well. Train your team to understand the difference.

Consider offering a separate, Non-Last-Room-Available (NLRA) discounted rate for leisure guests who are active/former military at a fair discount. This is especially useful for properties who have a Per Diem that is relatively low when compared to their usual BAR structure. This is also a best practice for coding and tracking purposes, as you will be able to identify over a certain period what amount of stays were for specific government business, and which were discounts extended to leisure guests.

Also, before simply ‘setting and forgetting’ your Per Diem, do a comp set shop online to see if your competitors offer a more competitive government Per Diem rate.

Finally, if you’re not sure what your Per Diem rate is, check out the GSA website here.  New Per Diem rates are typically announced in August or September for the upcoming October-September season. Don’t forget to update your rates as soon as the new rates are announced, or you could be missing out on a very valuable segment!

Comments are closed.