The little good news for innkeepers is that GSA has "unbundled" transient occupancy taxes (TOT) from room rates.  For example, the 1998 per diem rate in Sacramento was $81.00, which included both room and tax.  The 1999 rate is $79.00, but the TOT is now reported and reimbursed as a separate expense.  In Sacramento, where the TOT rate is 12%, a federal employee can now receive full reimbursement of lodging expense up to $$88.48. 

The per diem rates for some California destinations have increased.  With the effect of unbundling, the maximum rate for Sacramento increased 22.3% as compared to the GSA's 1998 rates.  Many other communities were not so fortunate. 

There is no effective increase in per diem rates for Los Angeles County.  Fresno, Napa, Mendocino, San Luis Obisbo, and Yolo counties are among the destinations that have seen their effective rates decreased by as much as twenty percent. 

Especially hard hit is Orange County, which in prior years was included in the Los Angeles per diem zone.  For 1999 the GSA has defined Orange County as its own destination area and established a lodging per diem rate of $75.00 (plus TOT).  This is a dramatic drop from the 1998 rate of $109.00 (including TOT). 

Asked about the 1999 rates, Jim Abrams, executive vice president of the California Hotel & Motel Association, stated, "Negatively affected lodging establishments can petition the GSA for a current year adjustment, but such action is unlikely to succeed.  It is possible for federal employees to request reimbursement up to 300% of the specified allowance, but approval is at the discretion of each employee's agency.  Innkeepers should be sure that federal employees and contractors staying at their properties are aware of this option." 

Abrams continued, "Now is the time for affected innkeepers to take steps to seek appropriate adjustments in the year 2000 federal per diem rates.  Lodging managers, being mindful of antitrust laws, can undertake several steps to persuade the GSA to adjust its rates. 

Innkeepers can develop and submit to GSA factual data about their communities that support an argument for higher rates.  Contact the GSA and determine if the methodology used to establish its current rates is flawed.  Remind the GSA that the statewide rate for California ($79/day) has not been increased in many years.  Work with the federal employees who stay with you, and your federal legislators, to petition for appropriate increases." 

Lodging establishment owners and operators can contact the California Hotel & Motel Association at (916) 444-5780 for additional guidance and suggestions regarding per diem rates applicable to specific destinations. 

With more than 1,100 lodging establishment members representing over 168,000 rooms, the California Hotel & Motel Association is the largest state lodging trade association in the nation.  CH&MA provides operations, technical, educational, marketing and advocacy services to California's lodging industry.