Why the tourism industry wants Prince William hotel rates to go up

The cost for a government employee booking a hotel in Prince William County may be changing, as organizations fight to raise the rates.

When a government employee travels, they book a room using a “per diem” rate – a rate set by the General Services Administration (GSA), that is different from the rate any other traveler would pay.

Using a formula, the GSA looks at these rates each year, and despite Prince William County’s proximity to Washington, D.C. the current per diem rate for the county is far lower than other localities.

According to the GSA, the per diem rate in Washington D.C. is $177 off peak – $229 per night during peak occupancy. Fairfax also has the same rate. But for Prince William, the rate is only $85 a night.

“There’s a huge disparity between the per diem rates that are charged in Fairfax, and those that get charged in Prince William and Loudoun…huge disparities between where the GSA determines [whether] they’re ‘in’ [Washington] D.C. or not. And there’s not much rhyme or reason to that,” said Eric Terry, president of the Virginia Hospitality & Travel Association.

Terry stated that the process for determining these rates is very arbitrary, and sometimes doesn’t make sense.

“I think it’s just arbitrary decisions that got made by the GSA. To tell you how arbitrary it is – one side of Dulles Airport, on the side towards Fairfax, you’ll pay $177 for a room. If you go to the other side, you’ll pay $96,” Terry said.

What does a lower rate mean?

While a person may think that a lower cost for booking a room would bring more government travelers to the area – which would in turn be beneficial to the county – that isn’t actually the case.

Terry said that while it’s technically cheaper for the government to book rooms in the county, because the rate is lower, the county gets a much smaller percentage of profit – as compared to localities like Fairfax.

“A portion of the [transient occupancy taxes] go to roads and other things in the county, so if you start with a lower rate, and the [taxes collected] are a lower part of the revenue – it’s a percentage tax, rather than a hard dollar number – yes it does in fact effect the counties,” Terry commented.

What is the impact?

The impact of the lower per diem rates is felt by the county, in relation to their tourism growth efforts according to Discover Prince William & Manassas President Ann Marie Maher,

“The per diem issue has been one that has been challenging for Prince William County in terms of securing government business here,” said Maher.

Maher also stated that Prince William is being clumped together with localities that are further south – including Spotsylvania and Stafford counties.

Jennifer Decker, a general manager at the Manassas Hampton Inn, expressed her frustration with the county’s lower per diem rates, and how it effects their own bottom line.

“Since Prince William County is situated just outside of DC, it is predominantly a government market and it is definitely by far our largest market for our hotel.  There are many large local government contracting companies, state government employees, state universities, etc that are requesting the government per diem rate so it reaches far beyond just the federal government,” stated Decker. “The per diem rate being as low as it is definitely affects our business and makes it hard to continue to grow year after year when the per diem rate continues to decline.  It affects our bottom line which in turn affects our decision to hire verse lay off employees and that affects the local economy.  It’s almost like a snowball effect for the county… It is very frustrating knowing that you can drive just 10 minutes away and the per diem rate increases by $100.00 or more especially when we provide the same services as they do.”

What will it take to change the rate?

Maher said that the county is currently fighting to get the per diem raised, and they are working with the county’s lobbyist – Jon Stirrup – to explain to the GSA why the rate needs to be adjusted during their next rate assessment period.

“The only way that our rate can be changed, according to the GSA is if a government planner basically sends a request to the GSA, letting them know that they can’t find rooms in Prince William County. That they’re running into trouble getting their needs met in a particular area…when a government planner calls – let’s say they call Quantico – and they say ‘hey we’d like to book’, [the hotel] can say ‘sorry we don’t have any rooms for the per diem rate’. Even though they have rooms – they don’t want to sell them at that rate because they know they can get a higher rate from people on the street,” said Maher.

Terry anticipates that in the next year the rates in the county will increase a bit, but they will not catch up with the rates of surrounding localities like Fairfax.