MI Per Diem Power Point

8/6/2019 MI Per Diem Power Point

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Presented for:

Department of Technology,Management, and Budget.

State of Michigan


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(Source: Michigan Economic Development Corporation Research May 2 010 )


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(Source: Michigan Economic Development Corporation Research May 2 010 )


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City 2000 2011Federal State Federal State

Ann Arbor $ 75 $6 5 $8 7 $6 5

Detroit $9 0 $6 5 $9 5 $6 5

Lansing $6 5 $6 5 $82 $6 5

G rand Rapids $62 $6 5 $8 1 $6 5

Kalamazoo $ 72 $6 5 $8 7 $6 5

Midland $ 72 $6 5 $9 0 $6 5

Petoskey $ 55 $6 5 $77 $6 5

Source: www.gsa.gov

When determining Federal per diem hotel rates, the U.S General Services Administration uses a markets average daily hotel rate for mid-rangehotels. Current Federal Employee per diems and those from 2 000 forselect Michigan cities are as follows:


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A $6 5 hotel rate in 2 000 adjusted for 11 years of inflation is equal to just $ 51 .07 in todays economy

Source: U.S. Department of Labor Bureau of Labor Statistics


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As a result, every year, fewer Michigan hotels canafford to participate with the $6 5 State EmployeeTravel Program amidst a decade of escalating costs:

200 6: 383 hotels participated2007 : 249 hotels (a 3 5% drop)200 8: 197 hotels (another 2 1% drop)200 9: 138 hotels (another 3 0% drop)2010 : 130 hotels participating2011 : 139 hotels participating

Source: Department of Technology, Management and Budget State of Michigan


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There are 28 hotels in Kalamazoo, Michigan, but only 3 hotels arecurrently listed on the States $6 5 travel list for employees. Other cities with poor availability include:

Ann Arbor = 3 hotelsBattle Creek = 1 hotelDetroit = 1 hotelEast Lansing = 1 hotelF lint = 2 hotelsMackinaw City = 2 hotelsMidland = 1 hotel

*$6 5 is simply not a viable rate for many Michigan hotels.Source: www.discoverkalamazoo.com and www.michigan.gov/dtmb


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A growing number of State Employees have had to stay inhotels that are further and further from their neededlocation or in some cases, not stay in a hotel at all andcommute to multi-day training. Both of these outcomescause higher mileage reimbursement expenses.

How can we improve the availability of clean, comfortable,and safe hotels to State Employees without increasing theStates travel costs?


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Raise the State Employee Hotel per diem for FY 12.

The MLTA will then initiate communications with their

existing hotel members announcing a per diem increase,the benefits of State Employee Travel, and details on howto participate.

The MLTA will communicate the same information withthe State-wide Convention and Visitors Bureaus.

Hotel Industry G oal double the number of hotelsparticipating for FY 12 with the above steps.


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Streamline the booking process for State Employees byadding a hyperlink to participating hotels listing onMichigan.gov

Sources for the links include the milodging.org,Michigan.org, and the participating hotels.

What would the web links look like, and how would they work?


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250 -3 00 participating hotels supplying State Employees with clean, comfortable, and safe rooms, in the bestlocations - are now just a click away.

Calls to the States third-party travel agent - and theirassociated fees, can now be limited to Employeesneeding reservations for air, car rental, out-of-state, orhotel help in high cost cities.


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When State Employees cant find a $6 5 hotel room ontheir own, they are directed to Conlin Travel.

Conlin Travel gets paid twice to book a hotel room for aState Employee. F irst $ 7 from the State of Michigan, thena 10% commission from the hotel that receives thereservation.


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G RAND RAPIDS TRAVERSE CIT Y

Room sells at $6 5

State pays $ 72

Hotel pays G DS fee - $ 5 +10% commission - $6. 50

Hotel nets $ 53. 50 Conlin keeps $ 13. 50 (2 1% )

Occurs 5,500 times/year

Room sells at $ 10 9

State pays $ 11 6

Hotel pays G DS fee - $ 5 + 10% commission - $ 11

Hotel nets $93

Conlin collects $ 18 ( 16. 5% )


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Over the last four fiscal years, the State has paid theircontracted travel agent $ 146, 580 in booking fees.

Over the same period, the third-party collected$2 77 ,826 in commissions from Michigan Hotels.

On average, when a $6 5 rate is not available the Statehas had to reimburse $83.6 1 . By increasing the number

of participating hotels, the State can reduce thefrequency of booking these higher rates.


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When comparing FY 200 9 travel expenses to previous year,hotel stays grew only $3 00 ,000 while mileagereimbursements to employees rose $2, 121 ,000 over thesame period.


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Only 2 7% of State Departments forFY

200 9 met theirtargeted reimbursement goal the lowest in all 10 travelcategories.

Doubling the number of available per diem hotels can helpState Departments better manage mileage reimbursementto employees that must travel.


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Raise the Employee Hotel per diem to $ 72 additional estimated annual cost is$4 50 ,000 . (this is only sixth tenths of 1% of Michigans total travel budget of $ 76M)

Reduce mileage reimbursement from four-year average of $ 11 ,733,694 by 4 % -annual savings $469,34 7.

Partner with MLTA to assist with web links to current hotel listings improvingemployee access to per diem hotels.

Conlin Travel currently books 4,423 rooms annually at an average rate of $83.2 1 .Better availability could allow 50% of these rooms to be booked directly by theemployee at $ 72. est. annual savings $3 7 ,581 .

Eliminate nearly all current booking fees charged by Conlin for rooms booked at$6 5 (2,92 5@ $7) est. savings $2 0 ,4 75 .

The State saves $ 77 ,000 annually.

Michigan Hotels save $38, 000 annually in agent commissions.


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For the DTMB:

Eliminates a worsening decline of per diem hotel

availability. New synergy with the MLTA. G ets the State per diem closer in line with Federal per

diems in Michigan. Reduces exception reports and day-to-day monitoring

of the States third-party travel contractor. Reduces negative reviews submitted by State

Employees of their hotel stay.


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For Michigan Hotels:

Provides an economic stimulus for the States thirdlargest industry.

Less commission payments at the end of the month tothird party travel agents.

Keep 100% of the rate.


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For State Employees:

Better availability of clean, comfortable, and safe hotels. 100% reimbursement. Less time commuting to multi-day training conferences. Better access to branded hotels loyalty programs Reduced need for phone calls to Conlin Travel waiting for

availability, features, locations, and confirmations. Make reservations from smart phones - anytime, anywhere. Immediate access to a hotels best web content, including

photos, amenities, nearby attractions, and drivingdirections.


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MI Per Diem Power Point

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