- Personal Finance
GSA Rates May Not Be for Everyone
Entities nationwide look for some standard to measure their travel expenses against. A measure to assure employees do not take advantage of travel accounts with over-priced hotels or expensive meals. Problem is that travel expenses can fluctuate nationwide as the cost of a hotel room and meals will be different in New York City than in Des Moines, Iowa.
The United States federal government does have the General Services Administration (GSA) that oversees the purchases of the civil government. Along with that charter, they also establish an annual travel expense matrix. These GSA rates are segmented by major metropolitan areas in each state establishing the maximum hotel rate (per night) and a daily meal per diem for that area. The GSA rates are not only used by the federal government but also state and local governments, not for profits, universities, and many businesses. It provides a free and easily available standard to gauge travel expenses.
The downside to using GSA rates for travel expenses, especially businesses, is they may not reflect reality for everyone. The GSA negotiates with major hotel brands for the best rates nationwide, this factors into the GSA rate. Unfortunately, these hotel rates will most likely not be available to everyone, especially if the hotel is or expects to be near occupancy. What happens is that the federal employees traveling on official government business can stay at a top-tier hotel like the Hilton or Marriott at government rates, but all others may have to stay at a mid-range to budget hotel to come under the GSA rate for a hotel stay in that city.
Other downsides include no allowance for entertainment or the purchasing of group meals, a necessity of sales people on a business call. There may be times when an entity must stay in the conference hotel that will possibly have a rate higher than the GSA rate. Then there is the executive travel experience that requires alternative travel matrices, i.e. flying first class. Therefore, businesses may want to adopt policies to keep expenses in check other than simply following GSA rates.
GSA rates are good for schools, universities, not-for-profits, and others. Businesses could use the GSA rates for business travel that may not involving marketing like service calls or training. Times when employees could use less expensive hotels outside of the more expensive areas, or when each employee can decide how to spend their per diems for meals. GSA rates are a good benchmark to gauge simple expenses in an unknown location.
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