Per Diem Rates Set

It’s a precarious time of year – the last week of August.  This is roughly the time each year when GSA publishes the next fiscal year’s per diem rates for cities all across the United States.  The rates take affect at the beginning of the fiscal year, also my birthday, October 1st and they run through the following September 30th.  But this one day when the rates are set has ramifications worth millions and millions of dollars.

Consider Washington, DC for example – and note that this is a rather extreme example.  In 2010, the federal per diem rate for Washington, DC in the month of January was a relatively robust $207.  For 2011, that rate was dropped to $181.  The difference of $26 is substantial enough, but now consider the revenue loss for a hotel that has a block of 50 rooms reserved for four nights.  That’s a $5,200 loss with no recourse whatsoever, provided the contract was signed with the terms, “or prevailing per diem”.  And just about all locales, all hotels, and all third parties suffered through substantial losses on this day last year.

But 2012 was a slightly different story.  Because on that very same day, all of the above mentioned parties who stand to lose when times are suddenly bad, stand to gain when the economy levels out.  This year most locales stayed flat to their previous per diems or took on slight increases.  Washington, DC was one market, which deservedly took a hearty gain.  There may wind up being just as many years where this fateful day is celebrated with gains from seemingly out of nowhere as there are when the day means tightening one’s belt for next year. 

Consider the cycle of evolving per diems over the course of many years to be roughly even.  But each year, prepare to adjust the next year’s projections based on GSA’s publishing per diem rates on this day.

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