This is bad news for a lot of federal government employees, who not only got great rates when traveling for work (saving the taxpayer money, the U.S. federal government is in many cases the single largest buyer of travel) but also as a perk for their time off too.

From a business perspective a ‘federal leisure rate’ can make a lot of sense.

  • Federal employees have discretionary income (so a good market to target) but generally aren’t wealthy (so discounts matter).

  • A hotel can generate incremental business with a discount for federal employees without undercutting the prices they charge to other customers.

However hotels are filling up in the U.S. You might look at comparable occupancy statistics and say that the hotel business still hasn’t fully recovered to 2019 levels, and that’s true. But weekend business generally has. In other words, in leisure markets, leisure stays are back – and beyond 2019 levels. However mid-week business stays are suffering – and averaging the two together the hotel business isn’t yet back to where it was pre-pandemic.

In any case, there’s no reason to offer deep discount inventory to stimulate extra room sales to government workers taking a weekend getaway, since hotels are in many cases filling these rooms at much higher prices. There’s no longer a need for a policy of ‘looking the other way.’

by Gary Leff