While per diem rates for government meetings are a little more realistic these days, planners still face budgetary challenges, particularly in today’s costly first-tier destinations, that would severely test the ingenuity of many travelers.
Try visiting Palm Springs with a daily budget of $194, Philadelphia on $213 or Miami with just $178. These constraints are what government planners deal with every day.
These three amounts are the per diem rates set forth by the U.S. General Services Administration (GSA) for 2008. At the beginning of every October, the GSA releases per diem rates by county for convention lodging as well as food and beverage allowances.
According to Carl C. Thompson, CGMP, executive director of the Washington, D.C.-based Society of Government Meeting Professionals (SGMP), the rates have become a little more tolerable in recent years.
“They have gone up some,” he says. “They [the GSA] have a better system of getting their information together from hotels and trying to come up with what their per diem should be. It used to be years ago that a form would go to hotels and they would send in what their going rate was, but they weren’t sending them in the way they should, so rates were lower than they should have been. Now they have a company that actually contacts all the hotels and gets the information from everybody.”
Julie Kirchhoff, CMP, manager, conference services for Vienna, Va.-based Management Concepts, a training and consulting company that works with the federal government, has also seen a recent increase in per diem rates.
“I am very pleased with the efforts that the GSA has made with regard to setting per diem rates,” she says. “It was about three or so years ago that they came out with rates where everyone’s jaws were dropping. They’ve gotten better since then.”
A Matter of Perception
Although per diem rates have increased, government planners still have plenty of other obstacles to contend with, a major one being the perception of a meeting’s location.
“[Government agencies] are always under scrutiny,” says Thompson. “They are always being watched. You wouldn’t have a meeting in January on Miami Beach.”
Mike Krop, manager, national events for the United States Postal Service, based in Washington, D.C., says between the challenges of cost and perception, “perception is the harder of the two.”
“Let’s say you are going to fly your senior managers for a leadership meeting and you are looking for a place that is not too terribly expensive,” he says. “One of the ones that will come to the top is Las Vegas, but the perception of a government agency going to Las Vegas is hard to get around.
“The bottom line is the perception that the government is taking advantage of the situation. So instead, we might go to Houston or Dallas, where the cost might be higher, but the perception is not there. The fact of the matter is people say it [Las Vegas] is a vacation spot. So you end up going to Dallas and Chicago where the cost of rooms may be higher. It is a balancing act.”
Economic Jitters
Beyond dealing with perceptions and per diem rates, government planners are wise to keep an eye on the state of the economy. And while many may argue that we are living in a sellers’ market right now, Thompson sees a change on the horizon.
“I think right now the hotels themselves can pick and choose [what meetings they book], but I think it will come to where they will be taking even more government business in the future because of that nasty word going around,” he says. “That “r” word.”
While a recession would ease the sellers’ market, it is also likely to mean smaller budgets for government agencies to work with. Krop is among government planners concerned about a downturn and says he is already feeling the affects of a slowing economy.
“I don’t know [if we are going into a recession], but I think we are,” he says. “The amount of money we have to spend on these types of things [meetings] is about half this year than it is in a normal year. We are trying to keep control of our prices and cut our costs.”
Krop’s experiences come as no surprise to SGMP’s Thompson, who says many government agencies have been experiencing cutbacks since the beginning of the fiscal year because “most of the monies have gone to defense this year.”
He explains that the reallocation of funds does affect all agencies with regard to their planning and says he has seen a lot of meetings getting cut back because of costs.
Short Notice
Increasingly tight lead times are another trend government meeting planners are facing.
And while it has long been customary for government meetings not to plan too far in advance in order to comply with yearly budgets, some say lead times are shrinking all the time.
“I do see lead times getting a lot shorter,” says Belinda Thompson, national sales director for the San Diego CVB.
“We do have shorter lead times,” Kirchhoff agrees. “I think that started to gradually change about two years ago. Lead times can now be as little as three months. The government might even call us up and ask us to put something together for a month from now.”
With lead times getting so short, hoteliers such as Stan Skadal, senior director of sales and marketing for the Hyatt Regency Houston, say it is much easier on hotels if planners give properties a few dates to work with.
“Flexibility is the key word,” he says. “If they [planners] can give a two- to three-week window in the time when they can meet, the chances they will find something faster are increased.”
Supplier Challenges
Government meeting legalese can also produce headaches on the supplier side since many government agencies do not deal with contracts, but instead use purchase orders.
“They pay with a purchase order,” Skadal says. “If the government wants to block 400 rooms with us, they will execute that contract on a purchase order, not a normal contract.
“That is an acceptable way of doing business on all brands,” he adds. Some hotels are sticky with it, but in the government’s eyes, a purchase order is as good as a contract.”
Although this can be objectionable for some hotels, Everett says if a group has a good track record of filling the number of rooms they book on their purchase order, properties tend to be more flexible.
“Have a good history,” she advises planners. “If they [a group] have a good history of picking up their full block, the hotels are more willing to work with them.”
Besides lead times and contracts, per diem rates also add an extra challenge for suppliers.
“The biggest challenge for the hotel is just to be able to take a group at that [per diem] rate,” says Everett.
Yet, when dealing with the government, Skadal says a hotel will either say yes or no.
“There aren’t a lot of negotiations that go on,” he says.
Useful Strategies
While a price negotiation may not be in the cards, Krop says a way to lessen the financial load is to bulk bill guest rooms.
“If you have 800 people standing in line for a room, they [the hotel] have to be ready for that,” he says.
“But if I do that for them, instead of $130 a night, they might do it [sell me guest rooms] for $115. If they don’t have to make a checkout bill for every person, it saves them time and money and accounting. It is good for the hotel and good for us.”
Krop adds that planners who have their choice of properties should visit them before signing on the dotted line.
“You have to go in person,” he says. “If you decide on a city or a geographical area, you should send someone for a day or so to check it out. You can’t just do it haphazardly. Even if you’ve been there before, you should go and sit down with the manager of the hotel. That is paramount.”
Kirchhoff advises meeting planners to build and maintain relationships.
“Once you develop a relationship with a hotel, you can go back to them again and again,” she says.
For planners interested in specific locations, Desiree Everett, convention sales manager for Travel Portland, suggests holding gatherings during off-peak times for better rates.
“A lot of hotels are willing to take the government per diem in the off-season,” she says, adding December, January and February are value seasons in Portland.
Krop says costs can also be cut by providing attendee transportation from the airport to the hotel, avoiding pricey cab fees.
According to Everett, using a CVB can also save government planners time and money.
“The CVB saves the government planner a lot of time,” she says. “We save them from calling every single hotel. We kick the lead out to all of the hotels.”
Looking Ahead
Peering into the future, SGMP’s Thompson foresees a decrease in face-to-face government meetings and an increase in virtual gatherings.
“The only thing I can see that may change is the number of attendees and the number of meetings,” he says. “With everyone so into telecommuting and using the Internet, maybe there won’t be so many people needing to travel and instead we will be able to connect in a different way—via the Internet.”
Krop agrees, adding that an increase in virtual meetings will not only affect “government meetings, but the private sector as well. It is very, very cost effective.”
Even with the cost savings, Krop doesn’t think virtual meetings will replace face-to-face meetings, especially when sensitive topics are at hand.
“It is not going to take over private meetings,” he says. “When you need absolute and total security, [holding a virtual meeting] is not a good idea. If you are talking about proprietary or classified information, you don’t want to put yourself at risk for a person to hack in.”
Yet regardless of how many face-to-face or virtual meetings there may be in the future or just how much the economy ebbs and flows, one fact remains: Government meetings are here to stay.
“They are a reliable group,” SGMP’s Thompson says. “Sit tight, they are not going anywhere.”
