For those of you that follow the hotel industry, STR’s chain-scale categories are something you are almost certain to be familiar with. You can see reference to the occupancy and room rate performance of these groups on STAR reports, corporate reports, investment analysts’ reports and even in presentations given by STR employees.
The original intention when we, in conjunction with the brands, developed these segments almost 20 years ago was to create a way to track industry performance at a more granular level. In addition, it was our intention to create categories that made sense to industry observers and was easy to maintain and understand. At that time the best way to do that was to make the categories solely based on average daily rate, meaning that we would assign a brand to a segment based on its system-wide achieved ADR for the previous calendar year.
No other factors would be considered. It was, and remains our feeling that any factors not easily measureable would, on some level, be subjective, and therefore may not be viewed as independent. It doesn’t matter how many Ming vases you have in the lobby, or how many guest services are provided, or whether you provide plastic cups in the room, or have an unbalanced geographic distribution or how many properties were in your brand. The only criteria considered was the average price paid by the consumers system wide during the previous year.
While this may seem a bit simplistic, that was the point. Easy to categorize, easy to maintain and easy to explain. Basically, we took the view that you are what your ADR says you are. And it has generally worked for the past 20 years.
As it was always our goal to have these categories reflect the current makeup of the industry we have several times over the years changed both the composition and name of the segments. While these changes have always caused a bit of angst for some brands, they generally have been accepted and used by the various industry constituencies.
However, over time the various users and uses of the chain-scale data have become more diverse and sophisticated. In addition, the reach, access and, frankly, the relevance of STR’s segment performance results and brand classification within those segments, get greater scrutiny than in the past.
This combination of factors have conspired to make the process behind our recently unveiled 2011 chain-scale nomenclature and brand designations longer and more difficult than ever before.
It seems that our desire for the simplicity of a rate-based chain scale system has begun to clash with the real world application and use of the categories. Generally, the needs of the financial, development and strategic planning analysts are not aligned enough to make this categorization useful for all. Because of that, STR’s ability to make chain scales segments that serve all its masters has become increasingly difficult. In a perfect world we could develop categories for each of these uses. However, the confusion that multiple segments would cause is probably too big a price to pay.
So where does that leave us going forward? As a start, we would like to entertain comments and suggestions from the industry about how we might be able to classify brands in relevant groupings going forward. While we believe no singular category will make everyone happy, perhaps there is a better way to go about this in the future. We will make no promises about the outcome of this, but we’re all ears about options and possibilities. Just let us know and perhaps together we’ll create a better mousetrap.
This would all be much easier if the U.S. lodging industry was just like Garrison Keillor’s Lake Wobegon: “Where all the companies are strong, all the financial, development and strategic staff is good looking and all the brands are above average.”