Staying competitive in the hotel industry is paramount for your success. Falling behind competition means fewer guests, which translates into lost profits. What aspect of your hotel business do you improve then? Are you going to base your decision on a hunch? To be able to identify your business strengths and weaknesses, you need access to data. That’s exactly what hotel star report analysis has to offer to you.
It doesn’t matter if you’ve never heard about it before. What’s important is that you did learn about it now and that you are eager to discover whether it can help you improve revenue management and other practices at your hotel. Let’s start with some basics, shall we?
What does STR stand for in hotels?
Before we take a deeper dive into star report analysis, you need to understand what STR stands for in hotels. STR is short for Smith Travel Research which is a renowned hospitality analytics firm founded in 1985. Not long ago, real estate data firm CoStar Group acquired STR for $450 million and renamed it dSTAR.
The firm specializes in dissecting the hospitality industry and hotel market. It gathers data from reliable sources and the hotels in its network. Then it transforms the raw data into actionable reports for its customers.
For instance, thanks to STR, we know that the US hotel industry recorded the highest RevPAR of $85.31 and monthly Occ of 66.1% since October 2019.
Don’t get confused by the acronym, though. Although it is spelled STR, it stands for Star Report. It has nothing to do with a five-star rating which helps you understand the guest sentiment. No, Star Report is used to understand how your hotel performs financially.
A Star Report is nothing more but a hotel performance report. However, what makes it unique and valuable is the comparison chart where you can assess the performance of your hotel against the performance of the main competitors in a given hotel market. It can help you run a data-driven SWOT analysis (evaluating the strengths, weaknesses, opportunities, and threats to your hotel business).
Star report is a result of a benchmarking process with one goal – to evaluate the performance of one hotel against its competitive set. A competitive set or comp set is a group of competing hotels formed by using strict criteria:
- Market segmentation;
- Customer base;
- Geographical area;
- Level of services.
Comp set is the starting point of the benchmarking process. To assess the performance of a hotel, STR takes into account RevPAR, average daily rate (ADR), and occupancy rate (OR), among other key performance indicators (KPIs). STR is not in charge of developing a comp set for you. You will have to do it yourself considering the following factors:
- Location of your hotel;
- Type of property (boutique hotel, resort, motel, resort, etc.);
- Number of rooms;
- Available meeting spaces in your hotel.
How to obtain star report for my hotel
To obtain a Star Report for your hotel, you need to inquire about the process on the official STR website. Unfortunately, there is no pricing on the official website. If you decide to obtain the Star Report for your hotel, you will receive daily, weekly, and monthly reports.
You will also have access to 18 months of historical data. It includes year-over-year, year-to-date, and running 3 and 12-month data percentage changes and indexes. The report covers various metrics, including the key ones such as RevPAR, ADR, and Occ.
How to read and analyze it?
Once you receive your first Star Report, the amount of data you have access to may appear overwhelming. Don’t worry; reading and analyzing a hotel star report is not hard. First, you need to understand what the Index column stands for.
Your performance is calculated as an index. The index is actually what tells you whether your hotel performs better than hotels in the comp set. You will be able to see the index for every KPI in the report. The index is calculated by dividing your KPI value with the average KPI value of the comp set, then multiplied by 100. If your index is above 100, it means that you outperform your comp set. If it is below 100, it indicates that you have a few things to improve.
The easiest way to read your Start Report is to scroll down past the Table of Contents and stop at the “Glance” sheet. There you can see Occ, ADR, and RevPAR values for every day of the last week. There are three rows, one for you, one for your comp set, and one for Index. With just one glance, you can see the changes in your hotel performance over the last week and check whether you outperform the comp set or not.
A slightly more complex way to analyze a hotel star report is to compare this week’s performance to last year’s one. You can do it for your hotel and your comp set. It is important to review Occ, ADR, and RevPAR from a year-over-year performance standpoint to identify precisely which subset of KPIs you need to improve.
What are the most important three tabs?
The most important tabs in a monthly Star report are Tab 2, 3, and 4.
Tab 2 provides you with a general overview of your KPIs and hotel performance. On Tab 2 you can find Indexes, percent changes, Occ, ADR, and RevPAR. You can use this information to compare short-term trends with the current month.
Tab 3 provides more detailed information. It contains the data found in Tab 2 only now in an extended format. On Tab 3, you can see how your hotel’s performance compares to relevant industry segments, including the comp set.
Tab 4 provides historical data on the hotel’s performance. This is where you want to go if you want to analyze how your hotel performs now compared to the previous performance. You can identify weekly, monthly, and yearly performance trends for your hotel and the comp set.
Here is one Star Report sample from the video above to make the analysis straightforward for you.
Right there in the bottom-right corner, you can see the Total value of your overall RevPAR for the week:
- 49.15 – the hotel is running a $49.15 RevPAR;
- -2.5 – means that RevPAR is down 2.5% over last year;
- 39.51 – The market (comp set) is running a $39.51 RevPar;
- –13.2 – means that RevPAR for your comp set is down 13.2% over last year.
It means that your hotel is performing better than the comp set. Your hotel has substantially higher RevPAR, and you are decreasing less year-over-year than the comp set.
The ADR Total section indicates that the hotel’s ADR is going down while comp set’s is going up. Additionally, the comp set has a higher ADR overall. The Occupancy Total values tell that your hotel is substantially outperforming the comp set with 41.3% ADR for your hotel and 35.9% ADR for your comp set. Also, year-over-year ADR values are way down by 15.3%, while your hotel is down by only 1.9%.
As you can see, Star Report provides essential insights into your hotel’s and the performance of your main competitors. Knowing how to read and analyze it can help you see exactly what’s going on in the market at any given time and identify the main factors contributing to your hotel’s good or poor performance.
Graduated from Standford University, Arielle has over 5 years of experience in the Hospitality industry. She holds an MBA in business administration from the IDC Herzliya, Israel. She currently works as Account Manager at UpStay, building and maintaining strong, long-lasting customer relationships. She is deeply passionate about helping hoteliers unlock significant new revenue streams from unsold premium inventory.