How The Drop In Government Travel Per Diems Hurt One U.S. City
Did Santa Fe get a raw deal on federal government per diems compared with other New Mexico cities? Regardless of that answer, the city’s dilemma shows the impact that per diems make at the local level.
A recent drop in the per diem rate federal government workers get when they travel to Santa Fe could cost the city millions of dollars in revenue, local officials say.
The city wants the U.S. General Services Administration to increase Santa Fe’s per diem, recently set at $88, to last year’s peak season rate of $105.
“If the hotels in Santa Fe have to absorb such a substantial loss of revenue, it will result in loss of jobs, and increased demand for social services in a City and State that are already struggling,” says a city letter sent last week to Daniel Tangherlini, administrator for the federal General Services Administration.
The GSA sets the per diem rates for federal government employees’ domestic travel.
Tourism officials say local hotel revenue could be reduced by more than $2.8 million this year if the new rate remains in effect.
The city letter was jointly signed by Mayor David Coss, Santa Fe Convention and Visitors Bureau chief Jim Luttjohann, New Mexico Lodgers Association president Charlie Grey and Santa Fe Lodgers Association president Ben Tutt, who manages La Posada de Santa Fe Resort and Spa.
On Oct. 1, the General Service Administration’s per diem for trips to Santa Fe dropped to the flat rate of $88 for the entire 2013-2014 federal fiscal year — a 16 percent decline from the “peak season” Santa Fe per diem of $105 from the previous year. Last year’s off-season per diem was $83.
The city letter said that information on the GSA website and from communications with industry group US Travel indicate that federal per diem rates were to be rolled back to 2010 levels and that seasonality was removed from the equation, with no bumps upward for peak season travel.
Data from Smith Travel Star, a private research group, was also used to set the rates, according to Santa Fe officials.
The change has left some in the local tourism community wondering if the new per diem rates for Santa Fe were incorrectly calculated.
The city’s letter questions how the Smith Travel Star reports and 2010 rates “were factored and whether Santa Fe had inadvertently been lowered in rate by too great an amount,” the letter to the General Services Administration said.
Santa Fe’s rates in 2010 were $109 for peak times and $88 for off-peak, the latter being the rate now set for the current year.
Other NM city rates
The letter said it’s puzzling comparing Santa Fe’s per diem to other New Mexico cities.
Las Cruces, for instance, has a current rate of $88 for this fiscal year compared to an off-peak rate of $70 in 2010. Taos was $77 in 2010 and is $90 now. Carlsbad’s current per diem rate is $105.
The letter states that Santa Fe’s proximity to Los Alamos National Laboratory and its status as New Mexico’s capital means “we are frequently host to government and government related business and meetings, so the reduction is of great concern.”
Luttjohann told the Journal he doesn’t have precise numbers on how much of the city’s tourism business is due to federal government business travel. But he’s calculated that around 34 percent of convention center bookings over the past two years included blocks of hotel rooms that were used for state or federal government purposes. Luttjohann said he’s trying to get more information on the impact of federal government travel from Santa Fe hotels.
Santa Fe Mayor David Coss said government business, state and federal, is a significant part of the city’s economy.
“I was happy to be working with the lodging industry to address this part of it,” he said.
In addition to a decline in hotel revenue, other potential problems for Santa Fe include local hotels being unable to accommodate the reduced rate “and therefore forgoing a significant portion of Santa Fe’s business makeup” and contractors attempting to renegotiate rooms that have already been booked, the city’s letter said.
The letter said federal travelers may have to stay at “distant” hotels because downtown lodgers may not seek their business and this could result in more transportation costs and other additional charges.
Luttjohann said some government business might end up pushed out of Santa Fe.
Charlie Grey, the president New Mexico Lodgers Association, said Santa Fe is a seasonal town and that should be considered when calculating per diem.
“It can’t be a flat year-round rate. It has to flow with the season. Hopefully they’ll take a look at it this year,” Grey said.
Grey reiterated that when hotels are affected their workers feel the pressure, too. “We have a lot of working families that depend on the hotel business in Santa Fe,” he said.
When Luttjohann first heard the news about the per diem, he said he reached out to representatives of US Travel. The industry group ultimately invited Coss and Luttjohann to speak at an industry conference in Las Vegas, Nev ., this week. The cost of the trip is being paid for with city funds and some contributions from the conference sponsors.
Luttjohann said he’s hopeful that by discussing the city’s case with so many insiders the request might move more quickly through the federal government.
Letters similar to the one sent to Tangherlini were also delivered to most of New Mexico’s congressional delegation, Gov. Susana Martinez, New Mexico Tourism Secretary Monique Jacobson and others.
Luttjohann said he doubts GSA administrators and congressional staffers have seen the city’s plea yet because they’ve been furloughed. ___