The U.S. hotel industry is likely to benefit from the General Services Administration’s recent decision to raise per diem rates for fiscal year 2025. This is the first increase in the meal and incidental allowance in three years, a change welcomed by the AAHOA and the American Hotel and Lodging Association.
Each year, GSA sets per diem rates to reimburse federal employees for room and board expenses while traveling on official business within the continental U.S. These are typically based on the room and board ADR for a 12-month period less five percent. Effective October 1, the standard per diem allowance for most of the continental U.S. will increase by $3 to $110, while the per diem allowance for meals and incidentals will increase by $9 to $68.
“Because government travel contributes significantly to hotel industry revenue, it is critical that federal per diem rates reflect the economic pressures hotels face today, which include ongoing inflation and widespread labor shortages,” said Miraj Patel, AAHOA Chairman.
For fiscal year 2025, the standard per diem rate for most of the continental U.S. is $178 per day, including $110 for lodging and $68 for meals and incidentals. This increase is particularly significant for hotels in markets that rely heavily on government travel, as it provides a stable source of revenue, particularly in smaller markets or areas with a strong federal presence.
AHLA expects the increase to generate approximately $100 million in additional revenue for the hotel industry, helping it recover from the pandemic and ongoing workforce challenges.
“These increases are an important victory for AHLA, which has made fair per diem rates an enduring federal advocacy priority,” said Kevin Carey, AHLA interim president and CEO. “Government travel is a critical source of revenue for hotels, and it is critical that federal per diem rates reflect market conditions and take into account the economic realities hotels face, including inflation and staffing shortages. We appreciate the efforts of GSA Administrator Robin Carnahan and the Biden administration on this issue.”
“By increasing these rates, GSA is not only supporting our industry, but also strengthening the economy as a whole, including restaurants and local businesses that benefit from government travel spending,” said Laura Lee Blake, AAHOA President and CEO. “This decision will have a lasting impact on hotels’ ability to continue to provide exceptional service to their federal employees and all travelers.”
AAHOA is consistently committed to fair per diem rates and has previously pushed for rates to be frozen at 2021 levels in fiscal year 2022 to support the hotel industry’s recovery from the COVID-19 pandemic.
In his State of the Union address on March 7, President Biden addressed issues long championed by hotel industry associations. AAHOA and AHLA responded with AAHOA holding its national spring conference and AHLA lobbying for a $9 nightly rate increase in fiscal year 2024.
