Lodging Management - How to Read a STAR Report

1. Lodging Management
How to
Read and Use
STAR Reports
By
James Lim
2012

2. STAR Overview

3. Smith Travel Research - History
• 1985
- founded, started collecting hotel data
• 1987
- started collecting monthly STAR data
• 1992
- started collecting Canada, Mexico, Caribbean data
• 1997
- started collecting Weekday/Weekend data
• 1998
- launched WWSTAR (worldwide)
• 1999
- launched DaySTAR (daily data)
• 2000
- launched eSTAR (electronic distribution)
• 2001
- launched DaySTAR Plus (Segmentation &
Additional Revenue)
• 2003 - launched Pipeline (Lodging Supply)

4. STAR Participation
US Census Database
• Nearly 49,000 properties (also non-participants)
• Hotels with 20 rooms or more (no B&B, Timeshares)
• Historical data (opens/closes, conversions, adds/drops)
• Continually updated
Monthly STAR Data Submission
• Over 23,000 properties and 3 million rooms
• Nearly 65% of all US rooms report
• All major chains
• Nearly 2,000 independents through INDV program

5. WW STAR Participation
• WW Census database of nearly 35,000
properties
• Nearly 7,000 properties participating throughout
the world
• Over 1,000 properties in Canada

6. STR Industry Categorization - Overview
Non-Geographic
• Scale (or Chain Scale or Market Scale)
• Tract Scale (or Collapsed Scale)
• Price (or Market Price)
• Tier (or Tract Tier)
• Locations
• Size
• Additional: Extended Stay, Full/Limited
Service, Types:
Resort, Golf, Spa, Boutique, Casino, …

7. COMP SET
A group of four or more
hotels, selected by the hotel
management, to benchmark the
subject property’s performance.

8. Competitive Set Rules
For Creating Comp Sets
• Minimum of four reporting hotels
• Single hotel or chain no more than 35% rooms
• Single company no more than 60% rooms
(parent company who owns multiple brands)
For Changing Comp Sets
• Changes made in pairs (add or drop2, add 1 and
drop 1)
• Can add single new hotel within six months
• Can drop non-reporting hotel

9. EXAMPLE:
Hotel Rex’s Comp Set
• Warwick Regis Hotel – 74 rooms
• Hotel Diva – 115 rooms
• Kensington Park Hotel – 92 rooms
• Hotel Triton – 140 rooms
• Orchard Hotel – 104 rooms
• Galleria Park Hotel – 177 rooms
• Hotel Rex – 94 rooms

10. Comp Sets – Include/Exclude
Some chains choose to exclude your
property from the comp set when it comes
to reporting
– Advantage – property does not dilute comp
set
– Disadvantage – share numbers are not 100%
true without property in comp set

11. Comp Set Changes
• Must come through corporate
• From company with comp set control

12. Comp Sets and Confidentiality
• Rules are strictly enforced
• Comp set changes are carefully monitored
• Check other/past comp sets, other reports
• Eliminate ability to isolate single property

13. STAR Data Loading
How
• Most data received via corporate feeds
• Data for independents entered via STR web
When
• Monthly data starts arriving after month end
• Daily data for prior week arrives on Monday or
Tuesday except for holidays

14. Reading
Your STAR Reports

15. Why do I need a STAR Report?
• Track your performance vs. competition
• Aids in the strategic pricing decisions
• Help improve profitability
• View Supply/Demand/Revenue changes

16. Benchmarking: My Property vs. My Comp Set
20% 20%
15%
10% 7% 10%
YOY Change
YOY Change
0% 0%
-3%
-10% -10%
-10%
-20% -20%
Manager A Manager B
A's Competitors B's Competitors
WHO IS THE BETTER PERFORMER BETWEEN
THE TWO MANAGERS?

17. DEFINITIONS
• Supply = rooms available during time period
• Demand = rooms sold, excluding comp rooms
• Revenue = room revenue only
• Occupancy = demand divided by supply (* 100)
• ADR = average daily rate, revenue divided
demand
• RevPAR = revenue per available rooms,
revenue divided by supply

18. MARKET SHARE
Market Share is the number of rooms in your hotel as a percentage of the rooms in your hotel’s
competitive market set.
STR# Name City, State Zip Phone Rooms Open Date
19657 Hotel Rex San Francisco, CA 94102-1102 (415) 433-4434 94 190706
19631 Hotel Triton San Francisco, CA 94108-3607 (415) 394-0500 140 192006
19638 Galleria Park Hotel San Francisco, CA 94104-4595 (415) 781-3060 177 191106
19648 Kensington Park Hotel San Francisco, CA 94102-1592 (415) 788-6400 92 192306
21450 Hotel Diva San Francisco, CA 94102-1223 (415) 885-0200 115 191206
25368 Warwick Regis Hotel San Francisco, CA 94102-1223 (415) 928-7900 74 198806
41618 Orchard Hotel San Francisco, CA 94108 (415) 362-8878 104 200011
796
Hotel Rex = 94 rooms
Total rooms in comp set = 796
To calculate hotel’s market share:
Market share = total rooms available
____________________
total rooms in market set
Market share = 94/796
= 11.8%

19. MARKET SET
STR# Name City, State Zip Phone Rooms Open Date
19657 Hotel Rex San Francisco, CA 94102-1102 (415) 433-4434 94 190706
19631 Hotel Triton San Francisco, CA 94108-3607 (415) 394-0500 140 192006
19638 Galleria Park Hotel San Francisco, CA 94104-4595 (415) 781-3060 177 191106
19648 Kensington Park Hotel San Francisco, CA 94102-1592 (415) 788-6400 92 192306
21450 Hotel Diva San Francisco, CA 94102-1223 (415) 885-0200 115 191206
25368 Warwick Regis Hotel San Francisco, CA 94102-1223 (415) 928-7900 74 198806
41618 Orchard Hotel San Francisco, CA 94108 (415) 362-8878 104 200011
796
MARKET SET
Hotel Rex
Hotel Triton
Galleria Park Hotel
Kensington Park Hotel
Hotel Diva
Warwick Regis Hotel
Orchard Hotel

20. MARKET SHARE IS YOUR PIECE OF THE PIE
If the Hotel Rex achieves 11.8% of the
total room nights generated within its market set
in a given month, our actual share equals our
Market/Fair Share, giving the Hotel Rex an
Occupancy index of 100 percent.
Hotel Rex
Hotel Triton
Galleria Park Hotel
Kensington Park Hotel
Hotel Diva
Warwick Regis Hotel
Orchard Hotel

21. MARKET PENETRATION INDEX
Market Penetration or Occupancy Index is
the percentage of demand for rooms
actually accruing to our hotel. It is
calculated as the ratio between the
Total Rooms Occupied in our hotel against
the Total Rooms Occupied collectively
attributed to our hotel’s market set.

22. Hotel Rex in March
1. 73.1% - average market occupancy
2. 78.6% - Hotel Rex
Step One:
Total market set of rooms = 796
Market Occupancy = 73.1%
31 days in March
Total rooms available = 796 rooms x 31 days = 24,676 total rooms available
Total rooms occupied of the market set = 24,676 x .731
= 18,038 (DEMAND)
Rex Hotel’s market share = 11.8%
Step Two:
Our goal of rooms occupied should be = 2,128 (18,038 x .118)
Hotel Rex’s total rooms available in March = 94 X 31 = 2914
2914 total rooms available x .786 occupancy = 2,290
We had a total of 2,290 rooms occupied
Total rooms occupied / market share = occupancy index
2,290 / 2128 = 1.07 or 107% occupancy index

23. Exercise #1
February
Given:
Hotel Rex’s Occupancy = 64.1%
Comp Set’s Occupancy = 68.4%
28 Days in February
Total comp set rooms = 796
Rex Hotel’s market share = 11.8%
Calculate the penetration index for the month of February.
Calculation:
Total rooms available in Feb = 796 x 28 = 22,288
22,288 x .684 = 15,245 rooms (DEMAND)
Hotel Rex’s Goal = 15,245 x .118 = 1,799 rooms (100% index)
94 rooms x 28 days = 2632 (Rex’s total rooms available)
2632 x .641 = 1,687 (Rex’s total rooms occupied)
1687 / 1799 = 93.7% penetration index

24. Possible Reasons…
• Location, fixed – no solution, signage may help
• Wrong management company
• Wrong management team
• Lack of marketing dollars to reach that primary market
• Lack of management sales effforts
• Lack of sales tools
• Old décor
• Wrong amenity mix
• Unfortunate reputation
• The list can go on…

25. Definitions
• Percent Change = (TY value – LY value) / LY value
(* 100)
• Occupancy Index = hotel occupancy / comp set
occupancy (* 100), also called penetration index
• ADR Index = hotel ADR / comp set ADR (* 100)
• RevPAR Index = hotel RevPAR / comp set RevPAR
(* 100), also called yield index
• Share or Market Share = property’s percent of total
• Rank = property’s standing among comp set, “2 of 7”
means 2nd highest in comp set of 7 properties

26. INDEX BALANCE
Index balance means you played the
market perfectly, capturing volume when
necessary and rate when possible. By
doing this, your occupancy and rate
indexes were rewarded mutually.

27. What’s an Ideal Balance?
Occupancy and rate indexes should
remain within 10 points of one
another if the hotel is optimally
managing the demand in the
marketplace.

28. REV PAR INDEX
An RevPAR index is designed to measure a property's fair
share of Segment's(comp set, market, tract, etc.) Revenue
Per Available Room (RevPAR).
RevPAR/Segment RevPAR x 100 = RevPAR Index
In most hotels, one of our benchmark measurements is
Achieving Rev PAR Index Goal.