Per Diem Rate Guidelines

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» Posted by on Feb 26, 2013 in Business Practices, Global Distribution Systems, Hotels, Payment Methods, Rental Cars | 0 comments

One of the distinct challenges the hotel community continues to encounter are the criteria set for establishing the areas to be surveyed and how the data from Smith Travel is used. The Data used to compile the rate and occupancy information tends to focus on all the area within the city limits, but does not focus on the main areas of where government or business travel is concentrated.

A good example is to compare Boston and San Francisco as these two cities for corporate travel rates are rather similar. Boston with seasonal rates of $203-$256 is a concentrated area with a large downtown and does not contain a suburban area containing many hotels. The majority of the hotels within the city limits are located in the downtown area.

San Francisco has a similar downtown area to Boston but also has a rather large suburban area within the city limits. If zip codes were used to identify the downtown areas, the per diem rates would then rise based on the hotels that would be compared. While raising the per diem rates seems one sided, it would actually give the government traveler significant savings.

The current highest rate allowed in San Francisco is $185 and is normally not readily offered by many of the most desired hotels. This then forces a traveler to choose a hotel outside of the downtown area which requires them to either rent a car which also incurs parking costs or travel by taxi which can easily cost $20-$30 each way from some of the more distant locations where the per diem is offered.

What we have normally said is that if you raise the per diem rates in the key cities that are most often used, we can save you money, by decreasing the number of rental cars used, parking fees, fuel costs and also save the traveler wasted time spent driving.

Having more involvement from the hotel community in the per diem setting process will make more of the most required areas for travel available to the government traveler. This will allow for better seasonality to be set by true demand and also allowing for the forecast of occupancy to be used in setting rates.

By Ted Miller, CHME, CHSP Starwood Hotels and Resorts

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