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017 STR Report - The Hotel Podcast!
Amanda Hite, President & CEO...
... one of the most influential leaders in commercial real estate today, joined STR in Jan 2006 when the company had one office in Hendersonville with 65 people. She became president and CEO in 2011 and in that role sets company policy and strategy while overseeing daily operations and implementing initiatives for STR's family of companies: Hotel News Now (HNN), based in Cleveland, Ohio and STR’s international headquarters, in London. She is a member of the boards of directors of the U.S. Travel Association (USTA) and the Hendersonville Chamber of Commerce. Today STR has 300 employees worldwide, with 170 situated at the corporate headquarters in Hendersonville, Tennessee, an international office headquartered in London, a regional office in Singapore, and, in total, 16 offices in 15 countries... and a network of 57,000 contributing hotels worldwide. Hardly any wonder they are the most important voice in the industry.
In today's podcast, Amanda explains how the hotel industry is at an all time high, and growing faster than ever, and tells us that historically for hotels, each downturn has been worse than the last…
The 'STR Report'
The STR Report was originally called, and continues to stand for, the “Smith Travel and Accommodation Report”. It is the aggregation of data voluntarily supplied by hotels to STR that describes how a set of competing hotels ,
the ‘compset’, is performing financially relative to a client hotel. In short the STR report provides a competitive set benchmarking tool to a hotel operator by comparing it against those other hotels that it sees as being competitive to itself. Hotels provide their financial results to STR and in return are given market level data at no cost. Or STR will provide compset data to hotel operators who buy such data.
Revpar
A Measure Upon Which Bonuses Are Based
The key data points that hotels look at are occupancy and the average daily room rate, but the key metric that drives decisions is what is called ‘Revpar’, or, revenue per available room. This is calculate by looking at total revenue divided by the total number of available rooms. The Revpar index is the metric that most hotels use to evaluate their own performance. Hotel staff meetings are usually planned around the delivery of their STR report and in many hotels the general manager’s bonus is tied to performance against the Revpar index.
Hotel Industry: Never Built Itself Into a Recession
After the last downturn, the transient demand for rooms came back quickly, but room rates did not climb as quickly as had been expected. Hotels are selling more rooms than ever before in the industry, but there are more rooms to sell than ever before, so the hot topic is the new supply and what will be the impact of that supply as it comes on stream.
Growth of 2% Forecast for 2017
There are 1.8 billion room nights as of April 2017 to sell, of which 1.2 billion were sold. Growth rate for supply is 1.7% for the 12 months to April 2017, although the total growth rate for 2017 is going to end up around 2% i.e. 2% more rooms in 2017 than in 2016, in the US. In the prior cycle, in 2006, there were a lot of rooms being closed to be used for other, non-hotel, purposes, but this time around this trend is not as pronounced – only around 25,000 or so rooms being closed in a year now, compared with 2006 when some 40,000 rooms were being closed and re-purposed.
Limited Service Dominates Growth
Construction in top 26 markets is showing some very fast growing cities. Nashville, for example, has 13% of the existing market coming on stream, New York has 14% additional to the existing supply in construction – this compared with only 2% nationwide. New York has been top of the list for the last three years. As an operator in New York it has been challenging because so much supply has come into the market – with almost 16,000 additional rooms currently under construction just in New York, which is an additional 14% coming into the market.
Impact of Airbnb
Forecast
STR is a focusing on shifting from an email delivery system to an online delivery system for the data that they produce, including improvements in intuitive visualizations and presentation of the data for clients. The company is also expanding even more rapidly around the world. Currently they have 57,000 hotels that participate in the STR program internationally, with the largest country outside of the US being China that overtook the United Kingdom in that position two years ago. The Asia focus will continue to grow, as well as a move into South America in 2017/2018.
Listen to or Watch the Full Podcast Here
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