Luxury Hotels in Government Market

When the bottom fell out of the economy three years ago, luxury hotels made an ambitious entrance into a market usually left for midscale and limited service brands – the government market.  In the past, these hotels were unable to offer per diem rates to their government customers because per diem rates were notably below the corporate rates these hotels could glean with ease.  When the corporate market went away and the government market did not, hotels who never before considered taking on this segment began chipping away.

The mid scale hotels would see this as a theft.  And it was hard to stop it in many instances.  But in four distinct ways, the government segment booking luxury level hotels was not in their best interest.

For one, it’s not tremendously helpful for a group to take a onetime shot at a luxury hotel that they won’t be able book consistently in the future.  This sets up an unrealistic precedent and will only look like a failure on the part of the meeting planner in future years when a luxury hotel can’t be contracted.

Secondly, the government market’s quid pro quo for often being able to enter into contracts without cancellation or attrition clauses, is the government’s ability to stay loyal to hotels who stay loyal to them.  For me, I take much more satisfaction in booking a hotel who was available for my clients at per diem three years ago and who will also be available for me in three year’s time.  While a novice planner might take an opportunity to impress the boss today, what good will that do him or her next year when he or she can’t achieve the same level?  Loyalty has its privileges and its rewards.

Third, even if a hotel who can’t normally offer per diem, offers it – say a resort hotel for example – if the hotel outlets aren’t priced accordingly, the meeting planner has now stranded their guests at a hotel they can’t dine in without exceeding their per diem.  This is frustrating and crippling for the government travel and unless there are dining options in the vicinity, this type of hotel should never be considered.

And finally, even if all the thresholds are met – the per diem rate exists, there are an abundance of affordable dining options, and the hotel is able to offer the rate again in future years – it won’t pass the Washington Post test.  If the Department of Labor is see conducting business at a resort or spa hotel, even though it’s perfectly acceptable, affordable, and productive, it will be seen as boondoggle, right or wrong.  Taxpayers money being spent where fun is being had?  Forget it.

Hotels interested in playing in the government area are welcomed, but this isn’t an arena with a revolving door.  These hotels should get in and stay in because the government market has continually bailed out the market when corporate inevitably goes away.

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