Originally Posted by
joshsam
When I worked for Congress (not sure how the other branches do it, though I think they're similar) we got the GSA per diem for each day (it was generally $165 a few years ago, higher in certain cities) and had to pay our hotel and meals out of that. So the cheaper the hotel, the more you had to spend on meals. There were some caps on meals ($15 breakfast / $20 lunch / $35 dinner), but in a lot of cities if the hotel was close to $165 you didn't have much to work with and paid out of pocket.
There are two ways of dealing with travel expenses for most gvmt agencies. There is 1) the per-diem that you mention (fixed-rate per day out of which you pay hotel & meals, leftover cash is yours) and 2) actual hotel rate + fixed meal reimbursement for high-cost cities. Under per-diem, the traveler has incentive to keep the hotel cost down as it leaves more for meals/etc, but there is no benefit that goes back to the gvmt for a cheaper hotel. Under actual expenses, the traveler has no incentive to keep the hotel cost down, other than the agency budget.