Despite budget cuts, government travel still represents a large portion of demand. Capturing that business requires tweaks to old strategies.
REPORT FROM THE U.S.—Vast reductions in government travel spending over the past few years is expected to continue moving forward, and hoteliers who want to continue receiving government business are finding new ways to accommodate.
The General Services Administration and the United States Department of Defense are just two examples of major government organizations that have dramatically reduced travel budgets. However, government departments and employees are still traveling and represent a large portion of business.
“What account do you have that’s doing $23 million in annual travel?” said Elizabeth Perrin, founder of Federal Hospitality Solutions, speaking on a series of webinars hosted by Hospitality Sales and Marketing Association International, titled “E3: The ethics, education and economics to doing business with the federal government.” Perrin stressed that while government travel is being cut back, it still represents a large portion of demand that hoteliers can capture.
However, catering to government business today requires tweaking old strategies.
“We need to really work together differently to be more ethical and more knowledgeable about the way the government needs business done,” Perrin said.
Speakers over the series outlined several tips to best attract and accommodate government business:
Heed the basics
Garland Preddy, director of education and training for the Society of Government Meeting Professionals, outlined a number of “do nots” that should be at the top of hotel and government meeting planners’ lists:
- Don’t hire third-party event planners to oversee the meeting setup;
- don’t offer “swag” to government employees;
- don’t charge more than the designated per-diem rate;
- don’t offer a location attached to a casino; and
- don’t hire outside speakers.
However, with all those rules, “it’s no wonder people are canceling the meetings,” Preddy said. “Who wants to take people out of town to listen to their own managers speak?”
The hotel industry was dealt a major blow when it was alleged that the Capital Hilton sold $16 muffins during a 2009 Justice Department meeting. While it turned out to be a misrepresentation of the bill, overcharging during meetings does happen, sources said.
Along the same lines, Matthew Keller, who represents federal government contractors and subcontractors in state and federal court, cautioned against bribing government meeting planners by offering kickbacks or extra loyalty points.
“If you are giving points to government employees, maybe the (Internal Revenue Service) doesn’t see it as a valuable thing, but that certainly could get someone in trouble,” he said.
If points are being used as an incentive, Preddy suggested outlining what is going to be done with the points in advance and asking if they can be used as a deposit on a future meeting.
Another somewhat common practice Keller cautioned against is raising the price of one service to accommodate for another. For example, many government meeting planners are not authorized to purchase food and beverage. Hoteliers should not raise the price of rooms to compensate for complimentary F&B.
“Hiding the cookies and beverages is not a good idea,” Preddy said.
If a meeting planner suggests it, “walk away from that business,” Keller said. “The federal government monitors how people are spending its money very efficiently.”
Speakers also suggested extra caution when deciding which guests get upgraded rooms. “Generally the group decides who is going to get the upgrade,” Preddy said.
Manage the channels
FedRooms is a third-party booking channel that provides Federal Travel Regulation-compliant hotel rooms for government travelers while on official business. Inventory on FedRooms is at or below per-diem rates and meets government travel standards.
Participating is FedRooms is a way to ensure rooms are available to government travelers, but rates and availability need closely managed.
“Did you properly load your rates? That’s critical,” Perrin said. “You may have assumed that when you handed your rates over everything was taken care of.”
She said hotels can be removed from FedRooms if lower rates are found elsewhere.
“Have a staff that understands the requirements—what can and can’t be done, how to bill the business,” Perrin suggested.
Manage appropriately on site
During the GSA’s 2010 Western Regions Conference at the M Resort in Las Vegas, Perrin said “anything that could go wrong did go wrong.”
She said a guest’s wife called room service and ordered $3,000 worth of additional items because she didn’t like what her clients were served. The hotel staff didn’t consult the initial contractor and request a supplement contract or ask for a personal credit card, as it should have. Instead the unapproved $3,000 room service was added to the master bill.
“In this time of government there are a lot of uncertainties,” Preddy said. “Planners are trying to do more with less. They want F&B, but they can’t pay for it.
“But you can’t be negotiating things where the buyer would personally benefit.”