Department of Defense Flat Rate Per Diem Policy | Revenue Management
Franchisees | On November 1, 2014 the Department of Defense (DoD) implemented a new policy related to reduced Per Diems for long-term hotel stays. For stays of more than 30 nights, the allowable Per Diem for DoD employees is limited to a percentage of the standard Per Diem. The Department of Defense is an important extended stay account for many of our brands, especially Residence Inn and TownePlace Suites, and this new policy could have an impact on hotel revenues if not managed properly by the franchisee. Below are the details of the new policy and possible exceptions.
It is important to note that there may be instances where the full Per Diem rate would be authorized (see ‘exceptions’ note below). However, it is likely that this business would not fit into your overall revenue management strategy as many of our extended stay hotels are running high occupancies.
While it is likely that many of these types of reservations will be made directly with the property, we urge you to utilize your Revenue Management resources to evaluate the potential business and make an informed business decision. Residence Inn and TownePlace Suites hotels are strongly encouraged to run these business opportunities through the ES Factor Business Evaluation Tool available in One Yield. You may use the ES Factor Evaluation Tool to review your market share position (specifically the ADR Index) to evaluate the market factors that can help determine a course of action. If your hotel depends on this business as a large part of your mix, work with your revenue management partner to put in place an appropriate strategy. For more information on this tool, access the ES Factor tool page on MGS.
We are confident that with the right approach and strategy you can minimize the financial impact that this new policy could have on your extended stay ADR.
Marriott International, through our Government Affairs team, is working to petition this new policy. You can learn more about our activities in the recorded Government Affairs webinar from earlier this week.
Effective November 1, 2014: Department of Defense Flat Rate Per Diem Policy
New Joint Travel Regulations Policy for Long Term TDY (Temporary Duty)
http://www.defensetravel.dod.mil/site/news.cfm?ID=29
Policy:
For Long-term TDY of 31 -180 days, the authorized flat rate is 75% of the locality per diem rate (lodging plus meals & incidental expenses – M&IE) payable for each full day of TDY at that location. For long-term TDY greater than 180 days, the authorized flat rate is 55% of the locality rate (lodging plus M&IE) payable for each full day of TDY at that location.
Booking procedure:
Bookings will be made by the individual traveler directly with the hotel or via their travel agency. At this time, DoD’s online booking tool, DTS (Defense Travel System), does not automatically calculate the reduced per diem based on length of stay.
Exceptions:
Any traveler unable to find suitable commercial lodging at the reduced per diem rate is advised to contact their Commercial Travel Office (CTO) for assistance. If both the traveler and the CTO determine that lodging is not available at the reduced per diem rate, the Authorizing Official may then authorize actual expenses (i.e., regular per diem rate).
Early Check-Out:
Should a traveler book a stay at the flat (reduced per diem rate), but then need to depart early (before 31 days), the hotel should adjust the rate to reflect the regular per diem.