While the federal per diem rates for hotels increased on Oct. 1, that doesn’t necessarily mean travelers can book higher-end hotels, according to research from Engine, a travel booking platform.  While the per diems apply only to federal workers, according to Engine, these annual rates tend to set the standard across industries. Engine analyzed hotel pricing across the largest US cities to see what the cap actually gets business travelers. 

In 27 of the 63 cities analyzed, the fiscal year 2027 per diem cap covers nothing above a 2.5-star hotel. Nationally, 2-star rooms came in under the per diem cap 89% of the time; 3-star, 60%; 4-star, 52%; and 5-star, 21%.

Additional findings: 

• The U.S. General Services Administration raised the standard rate from $110 to $113 and raised 280 of its 295 named destinations without lowering any. 

• The biggest increases helped move Tucson and Albuquerque to 4-star cities, and Louisville became a 3.5-star city.

• 4-star hotels: The per diem cap covers a 4-star hotel in just eight of 63 cities.
• 3-star hotels: The cap covers a 3-star hotel in 28 of 63 cities.