More News

Maryland hoteliers are decrying new, lower rates for federal employees staying at their hotels, saying the reduced rates will undermine their efforts to rebound from a recession that hit the travel industry hard.

The General Services Administration last week released new per diem rates for fiscal 2011, which vary by county. Several of the revised limits reduce the rates from last year, especially in the Washington, D.C., region, including Prince George's and Montgomery counties.

The rates for some areas in the region have been cut $26. The new ranges are $157 to $211, depending on the season, versus $170 to $229 previously.

"We know how everyone cries about wanting the government to cut spending. Here's a prime example of that, and it's going to affect everyone," said Steven Mayers, general manager of 184-room Radisson Hotel Largo. "If a hotel spends a lot of room nights on government workers, it will hurt them more."

Radisson sees its share of federal workers, especially with its proximity to an Internal Revenue Service building, Mayers said.

"Hotels are going to be forced to be more restrictive about when they take government business. No longer will they have their pick of dates," said Selim Soliman, general manager of the 269-room Doubletree Hotel & Executive Meeting Center Bethesda, which anticipates a quarter-million dollar loss in profits by next September.

He said hotels are strategizing about how to deal with these losses and looking at more stringent rules on cancellations and changes.

Mayers emphasized the need for hotels to be steadfast in their pricing, despite the dip in travel, arguing that rooms cost the same to maintain regardless of what a hotel charges for them.

In the Baltimore-Washington International Thurgood Marshall Airport region, Anne Arundel County rates fell to $114 or $100 from $120, depending on the season, and Howard County rates fell to $105 from $123.

"In this type of government-based market, it doesn't make sense," said Tom Clapsaddle, general manager of 127-room Hyatt Place Baltimore in Linthicum Heights. "Some of the local negotiator rates for businesses that do work with the government are also based off per diem, so we're getting hit there, too. It's going to be a tough haul in 2011."

The only way hotels can compensate for the losses is to increase prices in other areas, something they cannot do in this economy, Clapsaddle said.

"The only saving grace is that we're all probably plummeting together," he said.

"We can only hope there's enough business in the market to negotiate," said Steve Kaiser, general manager of the 280-room Hilton Baltimore BWI Airport, adding that demand has been up from the military base realignment program that's shifting jobs to nearby Fort Meade.

The GSA sets the rates by using Smith Travel Research's assessments of average daily rates and then lopping off 5 percent. Areas not given specific rates use the national standard of $77, up from $70 in fiscal 2010.

Through July, demand for Maryland lodging was up 9 percent over the same period last year, versus 7 percent growth nationally, according to Smith Travel.

In Baltimore city, where rates fell to $144 and $121 from $161 and $135, some hotel owners are predicting 11 percent revenue losses based on what they already have on the books.

"Being so close to the District, we rely on quite a large amount of government business," said Chris Orr, sales and marketing director for the 602-room Renaissance Baltimore Harborplace Hotel, adding that the hotel faces losing $200,000 from its current bookings.

He supports a plan by the Maryland Hotel and Lodging Association to ask Congress to intervene on the new rates, saying other cities have been able to affect per diem changes, although it may take a significant letter-writing campaign.

Ocean City hotels fared better in the rate changes, even increasing in some seasons. Owners attribute the softer blow to the area's already low rates, which ranged from $91 to $199.

The region also has been seeing more federal travelers recently through the base realignment program and returning soldiers, said Renée Seiden, sales director for the 250-room Clarion Resort Fountainbleau.

"In the summertime, our rates must be higher than [the new rate of] $192, so we have to be particular about government travelers," she said.

For national hotel companies, the problem is more complex. Nationally, rates dropped in 300 regions.

"We reported in mid-July on our second quarter that business travel was rebounding. As that happens, and typically carries with it higher rates over time, the segment that's represented by the federal per diem customer would contribute somewhat less on a relative basis to our overall revenue picture," Thomas O. Marder, vice president of global corporate relations for Marriott International in Bethesda, wrote in an e-mail. "As we review the quarter and the remainder of the year, we will have more that we can say about the impact of any change in the federal per diem on our business."

lrobbins@gazette.net

Marriott, which operates 34,000 properties worldwide, reported a net income of $119 million for the second quarter.