There was a big move afoot to reduce travel costs, in one model by excluding higher-end properties from the calculations of what hotels generally cost. The hotel industry enlisted its lobbyists, got Members of Congress to object, and the move was killed. Instead, the approach to ‘saving’ money was to ‘not spend more‘. Much to the disappointment (though relief) of members of Congress representing cities with the most hotel rooms in the world and with the most hotel rooms being sold at federal government rates in the world.
This post led to some interesting comments, both in the original post and with folks over email. (Some of the ideas in this post are mine, some theirs, all interesting… to me at least!)
One person recounting on the blog their argument about why reducing hotel allowances could actually increase costs of overall travel. They suggested that hotels at an acceptable price would be sold out in Boston, they’d have to stay in the suburbs and rent a car and pay gas and that total cost of that would be higher.
That’s Harry Reid’s purported argument for higher per diem, he’s the Senator from Nevada and Las Vegas has… most hotel rooms than anywhere else. But taking the example of Boston, it doesn’t seem to make any sense. The per diem in the suburbs isn’t much more than half of what it is for downtown Boston’s. It’s more difficult to get a room at the suburb per diem in the suburbs than the downtown per diem downtown (unless the traveler is paying Boston per diem outside the city, a violation of policy). Stay in the suburbs and rent a car usually would be cheaper rather than more expensive than staying downtown, even factoring in parking. It may not make sense to do because of the inconvenience, but it’s unlikely to be higher cost.
The government per diem rates have geographic boundaries. In DC is includes not just the suburbs but even the exurbs. That brings down the average hotel rate and thus pulls down the amount the government will pay for a room. But it also means foks traveling farther out from city center get a higher per diem than is actually necessary to get a room in the area (the cheap exurban stays are allowed at closer to downtown rates). Cities like Boston include only nearby Cambridge in the calculation. In Chicago, O’Hare is calculated with downtown (so if you’re staying by the airport, government employees will be able to stay pretty much anywhere any time, as the rates are allowable based on average downtown pricing).
One common complaint of government employees is that the ‘published government rate’ on a hotel website may be higher than what’s actually allowed. The hotel is offering the discounted rate that they only make available to federal government employees, that’s their ‘government rate,’ but the government employee won’t get the entire rate covered by their employer if it’s above the allowable per diem. Of course, one can top off the amount out of pocket. Hyatt’s website is a frequent target of this complaint.
Federal government per diems are fixed, they do not vary based on demand — high or low. There are dates when rooms are more expensive. And those make great arguments for raising the per diem…. except much of the year the per diem is way too high, weekends in the summertime you can get the Ritz-Carlton Tysons corner for $109 or $129. And have plenty of money left over. I know federal employees who book weekend trips all the time to stay at Park Hyatts around the country on cheap government rates for their weekends. I admit, I’m jealous.
I’m also willing to admit that my first reaction on how to ‘fix’ the government’s travel allowance system is probably wrong. The government can’t really do what private sector companies can.
When you have per diems, fixed amounts allowable on a given trip, those become goals for travelers to spend, rather than maximums.
And you get both too much spending at times, and at other times the amounts aren’t high enough to efficiently accomplish a trip’s goals.
There’s no question that private sector travel policies can be screwy and gamed, I sat on a panel last month at the Global Business Travel Association’s annual conference in Boston precisely on the topic of gaming travel policies. But the better ones are flexible enough to meet business needs — recognizing that the right decision about where to stay, how to fly, etc. depends on the purpose of the trip and a whole variety of tradeoffs for the traveler.
Sometimes it makes sense to stay in a conference hotel, for lower cost or likelihood of better informal interactions between, before, and after sessions. Sometimes schedules are tight and commute time matters. Sometimes the signaling matters — to the heavy traveling employee, to a client, what have you. And sometimes it doesn’t.
Who is traveling, for what purpose, over what period of time makes where to stay on a given trip entirely contingent… and all of this needs to be weighed against the costs for travel on a given set of dates, not the average rate over a set of months.
And a system like that, as much as I think it’s ‘better,’ simply does not work for the federal government.
One imagines it would be possible, using modern technology, to vary the allowable price of a hotel night based on real-time rates on the day of booking for a given stay. That would solve not just seasonality issues but peak travel date issues. You would have one price that sometimes isn’t enough money to get the room you need and other times would allow a club room at the Ritz.
But you’re still going to have the oddities of geographic boundaries for a given location. What hotels should be included and what shouldn’t be in those averages? Where should someone stay? My contention is that there’s not one right answer for “a federal government employee” but you can’t just change travel policies and expect things to work differently inside the federal government, what works best in some corporate environments is the kind of discretion that doesn’t work at all inside government.
As one correspondent pointed out to me, “the second a manager exercises discretion to make things easier for one employee, but does not do so for another, some form of a grievance gets filed claiming abuse of discretion. Many government managers find being divested of discretion liberating rather than limiting.”
As much as I’d want to ‘fix’ government travel, things are the way they are because of the essence of the institution in all likelihood, not because of poor bureaucratic decision-making. So it’s more complicated to reform than I probably gave credit for in my previous post.