The cost of travel, according to the federal government
Pier diem rates can have an effect on broader business travel.
The federal government has released its per diem lodging rates for federal road warriors for the coming fiscal year.
Those rates matter to the hotel industry. After all, the American Hotel & Lodging Association says the government generates billions of dollars in travel spending.
The spending, however large, isn't changing — the standard federal travel per diem is staying flat compared to last year at $83. The federal government is also trying to keep its travel budget down, cutting spending by 30 percent through 2016.
“We do not include the luxury brands like the Ritz-Carltons or the Four Seasons types,” says Christine Harada, associate administrator of the Office of Government-wide Policy at the General Services Administration. “But we also want to be cognizant of our travelers' safety so we try not to go too, too budget.”
The rate is more flexible in many big cities. For example, it might run up to $300 a night in New York, depending on the time of booking. Regardless of location, fancy hotels are generally off limits.
Harada says lodging per diems are determined by market data. They're going up in about 270 areas and falling in 50.
Ryan Meliker, managing director of equity research at MLV & Co, an investment bank, says hotels that get a lot of business from feds will likely set their overall room rates based on the per diem.
“If you think about a hotel right next to a major Air Force base that's generating a lot of their business from government as a result of the Air Force base, it's going to have a bigger impact on them than it is somebody else,” he says.
Jan Freitag with STR, a hotel research company that provides market data to the federal government, says the federal per diems also have spillover effects at private companies.
“They say, 'Okay, if the U.S. government reimburses this much we just follow suit,’” Freitag says, “especially if they are a consulting company to the U.S. government.”
How much does a per diem get you?
How well can you travel on that federal government per diem? Or the similar one from your employer?
We compared Lawrence, Kansas — one of many small-to-mid-size cities covered by the standard per diem — to our home base, Los Angeles — which, like most larger cities has an adjusted per diem. We checked hotel rates for a single traveler in the first week of September and user-submitted cost-of-living estimates from Numbeo.com.
Per Diem: $83 for lodging, $46 for food and incidentals (the standard rate)
Lodging: That allowance gives you (or your boss) a few hotel options in Lawrence, but your best bet is the local Holiday Inn or Baymont Inn and Suites. They both run around $80 a night, and the Baymont touts a free breakfast. Hampton Inn and Comfort Inn are just out of reach at around $100 per night.
Food: A morning cappuccino (or other coffee beverage) will run you about $3 in Lawrence. A lunch averages about $6.25 for fast food and $10 for an inexpensive sit-down restaurant, like local favorite the Burger Stand. Dinner at a mid-range restaurant like the Free State brewery will run you about $20 per person. That leaves something like $15 for incidentals or midnight snacks. Not bad.
Los Angeles, California
Per Diem: $133 for lodging, $71 for food and incidentals
Lodging: If you're a federal employee travelling to LA, you'll get more money for a hotel, but expect to stay pretty far from downtown, the city's hot spot. A room runs around $130 per night at the Holiday or La Quinta Inns by LAX or the Marriott Courtyard in Pasadena. On Airbnb, there are some modest rooms available in Hollywood and Santa Monica for under $100, if your government employer is more the gitz or beach type.
Food: $71 is the most generous per diem the government offers for food and incidentals, and you can eat pretty well with it. A cappuccino in Los Angeles averages just under $4, and a lunch at Mendocino Farms or other restaurant will set you back about $12. A decent dinner out at Baco Mercat, Bottega Louie or other mid-range restaurant will run you about $26 per person. But don't blow that extra money on desserts, because the rest of your per diem could go toward transportation. You could get a cab or rent a car, but you'll be shelling out at least $20 a day.