Hotel Revenue Glossary · Segmentation
Government Rate
A rate designated for government employees traveling on official business, often subject to per-diem ceilings set by government agencies. In the US, the General Services Administration (GSA) publishes maximum lodging rates by city, and hotels opt in to offer compliant rates.
Why it matters: Government rates provide predictable, year-round base business but at rigid, non-negotiable price points. Hotels near government offices or military bases may rely on this segment for midweek occupancy. The key is ensuring government rooms do not displace higher-rated demand.
Worked example: A 120-room property holds 25 rooms at a capped government rate of A$175 on Wednesdays. On an ordinary Wednesday the hotel sells 88 rooms and the allocation costs nothing — those rooms were never going to sell. On the four conference Wednesdays it sells out at a BAR of A$245: the same 25 rooms give away A$70 each, or A$1,750 a night, A$7,000 across the four. Closing the allocation on those four dates is the whole decision.
Common mistake: Assuming the per-diem cap is the rate you must charge every night. The cap is a ceiling, not a contract price — nothing stops you pricing government below it in a soft week to win the booking, or closing the plan entirely when you are compressed. Treating the cap as a standing obligation costs you both ways.