How to Read and Use STAR Reports

Lodging Management

ByJames Lim

2012

STAR Overview

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)

STAR ParticipationUS 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

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

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, …

COMP SET

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

Competitive Set RulesFor 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

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

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

Comp Set Changes

• Must come through corporate• From company with comp set control

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

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

Reading Your STAR Reports

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

WHO IS THE BETTER PERFORMER BETWEEN THE TWO MANAGERS?

Benchmarking: My Property vs. My Comp Set

15%

7%

-20%

-10%

0%

10%

20%

YO

Y C

hang

e

Manager AA's Competitors

-10%

-3%

-20%

-10%

0%

10%

20%

YO

Y C

hang

eManager BB's Competitors

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

MARKET SHAREMarket Share is the number of rooms in your hotel as a percentage of the rooms in your hotel’s competitive market set.

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%

STR# Name City, State Zip Phone19657 Hotel Rex San Francisco, CA 94102-1102 (415) 433-4434

19631 Hotel Triton San Francisco, CA 94108-3607 (415) 394-0500

19638 Galleria Park Hotel San Francisco, CA 94104-4595 (415) 781-3060

19648 Kensington Park Hotel San Francisco, CA 94102-1592 (415) 788-6400

21450 Hotel Diva San Francisco, CA 94102-1223 (415) 885-0200

25368 Warwick Regis Hotel San Francisco, CA 94102-1223 (415) 928-7900

41618 Orchard Hotel San Francisco, CA 94108 (415) 362-8878

796

74 198806

104 200011

92 192306

115 191206

Open Date

177

192006

94 190706Rooms

140

191106

MARKET SETSTR# Name City, State Zip Phone19657 Hotel Rex San Francisco, CA 94102-1102 (415) 433-4434

19631 Hotel Triton San Francisco, CA 94108-3607 (415) 394-0500

19638 Galleria Park Hotel San Francisco, CA 94104-4595 (415) 781-3060

19648 Kensington Park Hotel San Francisco, CA 94102-1592 (415) 788-6400

21450 Hotel Diva San Francisco, CA 94102-1223 (415) 885-0200

25368 Warwick Regis Hotel San Francisco, CA 94102-1223 (415) 928-7900

41618 Orchard Hotel San Francisco, CA 94108 (415) 362-8878

796

74 198806

104 200011

92 192306

115 191206

Open Date

177

192006

94 190706Rooms

140

191106

MARKET SET

Hotel RexHotel TritonGalleria Park HotelKensington Park HotelHotel DivaWarwick Regis HotelOrchard Hotel

Hotel RexHotel TritonGalleria Park HotelKensington Park HotelHotel DivaWarwick Regis HotelOrchard Hotel

MARKET SHARE IS YOUR PIECE OF THE PIEIf 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

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.

Hotel Rex in March

1. 73.1% - average market occupancy 2. 78.6% - Hotel Rex

Step One:Total market set of rooms = 796Market Occupancy = 73.1%31 days in March Total rooms available = 796 rooms x 31 days = 24,676 total rooms availableTotal 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 = 29142914 total rooms available x .786 occupancy = 2,290We had a total of 2,290 rooms occupied Total rooms occupied / market share = occupancy index

2,290 / 2128 = 1.07 or 107% occupancy index

Exercise #1

February

Given:Hotel Rex’s Occupancy = 64.1%Comp Set’s Occupancy = 68.4%28 Days in FebruaryTotal comp set rooms = 796Rex Hotel’s market share = 11.8%Calculate the penetration index for the month of February.

Calculation:Total rooms available in Feb = 796 x 28 = 22,28822,288 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

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…

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

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.

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.

REV PAR INDEXAn 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 isAchieving Rev PAR Index Goal.