Hotel Math 101

(the Metrics behind

STAR Reports and Data)

The SHARE Center

Supporting Hotel-related Academic Research and Education

Steve Hood
Senior Vice President of Research
Smith Travel Research
 Outline
• Property Data
• Comp Set Data
• Industry Data
• Corporate Data
• International Issues
• Additional Data
Property Data
 Starts with Raw Data
• ____________for every hotel is obtained from
clients via corporate feeds or web entry
• Sample monthly file:
Hotel ID Hotel Name Date Rooms Available Rooms Sold Room Revenue
12345 Fairfield Memphis 201007 3,100 2,000 200,000
23456 Courtyard Nashville 201007 6,200 4,000 450,000
34567 Marriott Knoxville 201007 9,300 7,000 1,000,000
45678 Renaissance Atlanta 201007 7,750 6,000 900,000
56789 Residence Inn DC 201007 4,650 3,000 390,000

• Daily file would look the same except for the

date field, YYYYMMDD or 20100725
 STR Data Guidelines
• Supply (__________) – the number of rooms
in a hotel multiplied by the days in the month
• Demand (_________) – number of rooms sold
by a hotel, does not include comp rooms or
“no-shows”
• Revenue – total room revenue generated from
the _________, includes __________not
resort fees, nothing else such as _______
Key Performance Indicators
From these raw data values, STR calculates the
three key performance indicators (KPIs), which are
used for reports:
• Occupancy - %
•Average Daily Rate (ADR)- $
•Revenue per Available Room (RevPAR)- $
important metric, based upon all rooms, some
feel like it is better measurement of profitability
 Occupancy
Definition
The percentage of available rooms that were
sold during a specific time period.

Calculation
Occupancy is calculated by dividing the demand
(number of rooms sold) by the supply (number of
rooms available), this is a percentage

Occupancy = Demand / Supply

 Monthly Occupancy - Formula

A B C D E F G
Occupancy
1 Supply Demand Revenue (Formula) (%)

2 Jan-10 3100 2345 198765 2345/3100 75.65%

3 Feb-10 2800 2002 175432

4 Mar-10 3100 1776 175012

5 Apr-10 3000 2468 234567

6 May-10 3100 2987 312345

You could multiply times 100 or format as a percentage

 ADR
Definition
A measure of the average rate paid for rooms
sold during a specific time period.

Calculation
ADR is calculated by dividing the room revenue
by the demand (rooms sold), this is a dollar
amount
ADR = Revenue / Demand
 Monthly ADR - Formula

A B C D E F G

1 Supply Demand Revenue (Formula) ADR ($)

198765/234
2 Jan-10 3100 2345 198765 5 84.76
175432/200
3 Feb-10 2800 2002 175432 2 87.63

4 Mar-10 3100 1776 175012 98.54

5 Apr-10 3000 2468 234567 95.04

6 May-10 3100 2987 312345 104.57

You could format as a “$” or as a number with 2 decimals

 RevPAR
Definition
A measure of the revenue that is generated by a
property in terms of each room available. This
differs from ADR because RevPAR is affected by
the amount of unoccupied rooms, while ADR only
shows the average rate of rooms actually sold.
Calculation
RevPAR is calculated by dividing the dividing the
room by the average rate of rooms actually sold.
RevPAR = Revenue / Supply
 Monthly RevPAR – Formula

A B C D E F G

1 Supply Demand Revenue (Formula) RevPAR ($)

2 Jan-10 3100 2345 198765 D2/B2 64.12

3 Feb-10 2800 2002 175432 D3/B3 62.65

4 Mar-10 3100 1776 175012 D4/B4 56.46

5 Apr-10 3000 2468 234567 D5/B5 78.19

6 May-10 3100 2987 312345 D6/B6 100.76

You could format as a “$” or as a number with 2 decimals

 Percent Changes
Definition
The comparison of s(TY) numbers vs. Last
year(LY) numbers. The percent change
illustrates the amount of growth (up, flat, or
down) from the same period last year.

Calculation
Percent Change = ((This Year – Last Year) /
Last Year) * 100
 Demand Percent Change
  A B C D E F G

1   This Year   Last Year   Percent Change

2   Demand   Demand   (Formula) Demand

3 Jan-10 2345   2456  -4.52

4 Feb-10 2002   2112  -5.21

5 Mar-10 1776   1750  1.49

6 Apr-10 2468   2345  5.25

7 May-10 2987  2555  16.91

You could multiply times 100 or format as a percentage

 ADR Percent Change
  A B C D E F G

1   This Year   Last Year   Percent Change

2   ADR   ADR   (Formula) ADR

3 Jan-10 84.76   81.93 

4 Feb-10 87.63   88.85 

5 Mar-10 98.54   100.07 

6 Apr-10 95.04   95.24 

7 May-10 104.57  116.93 

You could multiply times 100 or format as a percentage

 Daily vs. Monthly Data
• Formulas for KPIs and Percent Changes are
the same
• The date fields are different:
201007 – monthly
20100725 – daily
• Most daily percent changes are based upon
________, in other words
_____________________________
Thu 20100715 compared to Thu 20090716
Sat 20100731 compared to Sat 20090801
 Multiple Time Periods
• Multiple time periods for monthly data include:
Year-to-Date (YTD)
Running 12-Month (12 Month Moving Avg)
Running 3-Month
• Multiple time periods for daily data include:
Current Week
Month-to-Date (YTD)
Running 28-Day (different than Running 4-wk)
• The metrics for these time periods are based upon
the aggregated raw data.
YTD Supply, Demand, & Revenue
  A B C D
1   Supply Demand Revenue
2 Jan-10 3100 2345 198765
3 Feb-10 2800 2002 175432
4 Mar-10 3100 1776 175012
5 Apr-10 3000 2468 234567
6 May-10 3100 2987 312345
7 (Formula) sum(B2:B6) sum(C2:C6) sum(D2:D6)
8 May YTD 15100 11578 1096121

Use the SUM function to aggregate the raw values

 YTD Occupancy, ADR, & RevPAR

  A B C D E F G
1   Supply Demand Revenue Occupancy ADR RevPAR
2 Jan-10 3100 2345 198765     
3 Feb-10 2800 2002 175432     
4 Mar-10 3100 1776 175012     
5 Apr-10 3000 2468 234567     
6 May-10 3100 2987 312345     
7 YTD 15100 11578 1096121 76.7 94.67 72.59
8 (Formula)       C7/B7*100 D7/C7 D7/B7

Aggregate raw values, then apply same formulas as before

 Other Multiple Time Periods
• The Raw data for other monthly and daily time
periods are calculated the same way by
aggregating the raw data for every month or day
in the entire time period
• The calculated metrics (Occupancy, ADR, and
RevPAR) for multiple time periods are always
calculated from ___________________
• Numbers for multiple time periods never use
averages of monthly values
 Percent Changes for Multiple
Time Periods
• The percent changes for multiple time periods are
based on the aggregated values or the calculated
metrics which are derived from the aggregated
values for this year compared to the same values
for last year
• Percent changes for daily data are based upon
groups of comparable days, with the exception of
Month-to-Date numbers which are based on a
date-to-date comparison
 YTD Percent Changes
  A B C D E F G H I J K L M N O P

    This Year Last Year Percent Changes

Sup- Dem- Occu- Rev- Sup- Dem- Occu- Rev-

1 Date  ply and Revenue pancy ADR PAR ply and Revenue pancy ADR PAR Occupancy ADR RevPAR

2 Jan-10 3100 2345 198765      3100 2456 201234           

3 Feb-10 2800 2002 175432      2800 2112 187654           

4 Mar-10 3100 1776 175012      3100 1750 175123           

5 Apr-10 3000 2468 234567      3000 2345 223344           

6 May-10 3100 2987 312345      3100 2555 298765           

7 YTD 15100 11578 1096121 76.7 94.67 72.59 15100 11218 1086120 74.3 96.82 71.93 3.2 -2.2 0.9

8 (Formula)                         (E7-K7)/K7*100 (F7-L7)/F7*100 (G7-M7)/G7*100

Aggregate 1st, KPI formulas 2nd, % Change formulas 3rd

Full Availability – Subject Hotel
• Occasionally a subject hotel may report a Supply
number that is different than the number of rooms
in the property times the days in the period
• If this happens in the case of the subject hotel,
their STAR report will always reflect the Supply
and the corresponding Occupancy based upon
the number _________________.
• STR does not change the Supply number of the
subject hotel on their own STAR report
 Full Availability Example - Subject
  A B C D E F G H

Report-
# Actual ed Occu-
1 Date Rms Supply Supply Demand Revenue Formula pancy

2 Jan-10 100 3100 3100 2345 198765 D2 / E2 * 100 75.6

3 Feb-10 100 2800 2744 2002 175432 D3 / E3 * 100 73.0

4 Mar-10 100 3100 2945 1776 175012 D4 / E4 * 100 60.3

5 Apr-10 100 3000 2700 2468 234567 D5 / E5 * 100 91.4

May-
6 10 100 3100 3100 2987 312345 D6 / E6 * 100 96.4

Occupancy for Subject based on reported Supply, not Actual

 Weekday/Weekend and Day of
Week Data vs. Monthly Data
• Sometimes a hotel will submit daily data that
does not add up exactly to the monthly number
• There are good reasons for this; some systems
do not accept adjustments to daily data, only to
the month numbers
• STR will slightly adjust the daily numbers based
upon the monthly data when they are aggregated
by day of week and weekday/weekend

Use percentages for each day, ensures WD/WE adds up

Percent Changes and WD/WE or
Day of Week Data
• ____________ (WD/WE) Percent Changes
compare all the aggregated weekday or
weekend data (per month or other time period)
this year to the same data last year
• ____________(DOW) Percent Changes
compare all the aggregated daily data for a
single day (per month or other time period) this
year to the same data last year
 Running 4 Week Data
• The Weekly Reports compare individual daily
data for the Current Week to the Running 4
Week numbers
• The Running 4 Week numbers are the
aggregated data __________________, i.e.:
_____________
• A hotel can compare their Monday performance
metrics to the average of the last 4 Mondays
Competitive Set
Data
 Key Performance Indicators
for the Competitive Set
• Numbers for the comp set are derived based on
aggregated raw data
• Supply, Demand, and Revenue numbers are the
combined values of each hotel in the comp set
• Occupancy, ADR, and RevPAR numbers are
bases on the aggregated Supply, Demand, and
Revenue
Including or Excluding the Subject
Hotel in the Competitive Set
• STR allows companies to choose whether to
include or exclude the data for the subject hotel in
the numbers for the comp set
• Historically companies usually included the data
for the subject hotel, but more recently most
companies have decide to exclude the subject
• People feel that having the subject data included
in the comp set numbers distorts the comp set
Comp Set Supply, Demand, & Revenue
  A B C D E
1 Property Date Supply Demand Revenue
2 11111 May-10 3100 2222 187654
3 22222 May-10 3255 2468 198765
4 33333 May-10 2945 2345 223344
5 44444 May-10 2790 1987 165432
6 5555 May-10 3410 3210 298765
7 Comp Set May-10 15500 12232 1073960
8 (Formula)   sum(C2:C6) sum(D2:D6) sum(E2:E6)

Aggregate raw values for each member of the comp set

Comp Set Occupancy, ADR, & RevPAR
  A B C D E F G H

1 Property Date Supply Demand Revenue Occupancy ADR RevPAR

2 11111 May-10 3100 2222 187654 71.7  84.46  60.53

3 22222 May-10 3255 2468 198765 75.8  80.54  61.06

4 33333 May-10 2945 2345 223344 79.6  95.24  75.84

5 44444 May-10 2790 1987 165432 71.2  83.26  59.29

6 5555 May-10 3410 3210 298765 94.1  93.07  87.61

7 Comp Set May-10 15500 12232 1073960 78.9 87.80 69.29

8 (Formula)   D7/C7*100 E7/D7 E7/C7

Apply KPI formulas to aggregated comp set data

 Percent Change Numbers
for the Competitive Set

• Percent Change numbers for the comp set are

calculated similarly to the ones for the subject
property
• These numbers show increases or decreases in
performance this year versus last year
 Comp Set Occupancy, ADR, & RevPAR
Percent Changes

  A B C D E F G H I J K

1     This Year Last Year Percent Changes

Occu- Rev- Occu- Rev-

2   Date pancy ADR PAR pancy ADR PAR Occupancy ADR RevPAR

3 Comp Set May-10 78.9 87.80 69.29 82.6 93.86 77.50 -4.4 -6.5 -10.6

4 (Formula)              (C7-F7)/F7*100 (D7-G7)/G7*100 (E7-H7)/H7*100

Calculate TY & LY KPIs, then apply % Change formulas

 Index Numbers
• The Index numbers compare the performance of
the subject property to the comp set
Subject / Comp Set * 100
• A number greater than 100 means the subject
property _outperformed___________ the comp
set and a number below 100 means the comp set
______________the subject property
• Index numbers are available for Occupancy,
ADR, RevPAR and the Percent Changes

Index numbers are percentages, multiple * 100 or format as %

 Occupancy, ADR, & RevPAR Indexes

  A B C D E F G H I J

    Subject Property Comp Set Index Numbers

Occu- Rev- Occu- Rev-
1   pancy ADR PAR pancy ADR PAR Occupancy ADR RevPAR

2 May-10 96.4 104.57 100.76 78.9 87.80 69.29

3 (Formula)           

Calc KPIs for Subject & Comp, then apply Index formula
Index Percent Change Numbers
• First you calculate the Index numbers this year
for Occupancy, ADR, and RevPAR
• Next you calculate the Index numbers for last
year using the same formulas
• Then you can calculate the Percent Changes for
the Index numbers, this shows whether the
Subject is improving
• Indexes could be below 100 TY, but if Percent
Changes are positive, Subject is improving
 Occupancy, ADR, & RevPAR Index
Percent Changes
  A B C D E F G H I J

1   Index Numbers

2   This Year Last Year Percent Change

Occu- Occu-
3 Date pancy ADR RevPAR pancy ADR RevPAR Occupancy ADR RevPAR

4 May-10 122.1 119.1 145.4 99.8 124.6 124.4 22.3 -4.4 16.9

(B2-E2)/E2 (C2-F2)/F2 (D2-G2)/G2

5 (Formula)             *100 *100 *100

Calc indexes TY & LY, then apply % Change formulas

 Ranking Data – What is it?
• STAR Property Reports include Ranking
information for Occupancy, ADR, RevPAR and
each Percent Change, comparing the subject
hotel to the comp set
• The Ranking data would be in the format of “X of
Y”, where X is the subject hotel’s position and Y
is the number of participating properties in the
comp set, for example “2 of 7” would mean the
subject hotel had 2nd best value in the comp set of 7

Ranking data gives you more than just the KPIs & Indexes
Occupancy Ranking Data – How?
• The values for each hotel in the comp set
including the subject hotel are sorted and then
the position of the subject hotel is determined
within the group

4567
STR# 1234 2345 3456 (Subject) 5678 6789
Value 87 85 83 82 78 75
Rank 1 of 6 2 of 6 3 of 6 4 of 6 5 of 6 6 of 6

Subject had the 4th highest occupancy in the comp set of 6

 ADR Ranking Data – Ties

• If two or more hotels are tied, i.e.: they have the

same value, then each hotel would get the same
number

4567
STR# 1234 2345 3456 (Subject) 5678 6789
Value $97 $95 $95 $95 $92 $88
Rank 1 of 6 2 of 6 2 of 6 2 of 6 5 of 6 6 of 6

Subject had the 2nd highest ADR (with 2 others) in comp set
 Multiple Time Periods and
Comp Set Data
• Multiple time periods are handled the same way
for a comp set as they are handled for a subject
property
• The Raw data for monthly and daily time periods
are always aggregated and then calculations are
applied to the aggregated data
 Sufficiency of Comp Set Data
• If a Comp Set has 3 or more participating hotels
(submitting actual data) then that comp set is
defined as “Sufficient”
• The numbers for that comp set can then appear
on the STAR report
• Multi-year numbers are considered to be
sufficient if greater than 50% of the months or day
included in the multi-year period are sufficient
Full Availability and Comp Sets
• Occasionally a hotel in the comp set may report a
Supply number that is different than the number
of rooms in the property times the days in the
period
• In those cases, STR uses the Supply number
based upon full availability, not the number that
the hotel reports
 Full Availability Example
  A B C D E F H G I
Occu- Occu-
Actual Reported pancy pancy
1 PropertyDate # Rms Supply Supply Demand Revenue (Full) (Report)
2 11111 May-10 100 3100 3100 2222 187654   
3 22222 May-10 105 3255 3340 2468 198765   
4 33333 May-10 95 2945 2900 2345 223344   
5 44444 May-10 90 2790 2199 1987 165432   
6 5555 May-10 110 3410 3410 3210 298765   
7 Comp Set May-10   15500 (14949) 12232 1073960 78.9 (81.8)

sum sum sum D7/F7

8 (Formula)     (D2:D6)   (F2:F6) (G2:G6) *100  

Formulas are based upon Actual Supply, not Reported

 Non-Reporting Hotels in the
Comp Set
• There may be situations where one or more
hotels in a comp set does not report data for a
month or more
• First, the Supply, Demand, and Revenue for the
participating properties is aggregated. This is
the “Sample” Supply, Demand, and Revenue.
• Next, an Occupancy and ADR is calculated
based on the Sample data
 Non-Reporting Hotels in the
Comp Set - continued
• Then the Supply is determined for all hotels in
the comp set, simply the number of rooms times
the days in the month. This is referred to as the
“Census” Supply.
• This Supply number is multiplied times the
Sample Occupancy to derive the Census
Demand
• The Census Demand is multiplied times the
Sample ADR to derive the Census Revenue
 Non-Reporting Hotel Example
  A B C D E F G H
Supply Occu-
1 Property Date # Rms (Actual) Demand Revenue pancy ADR
2 11111 May-10 100 3100 2222 187654   
3 22222 May-10 105 3255 2468 198765   
4 33333 May-10 95 2945 2345 223344   
5 44444 May-10 90         
6 5555 May-10 110 3410 3210 298765   
Comp Set
7 Sample #s   410 12710 10245 908528 80.6 88.68
Comp Set
8 Census #s   500 15500 12494 1107961    
D8 * G7 /
9 (Formula)     C7 * 31 100 E8 * H7    

Calc Occ & ADR based on Sample, multiply * Total Supply

Industry Data
 Industry Data Basics
• STR uses a variety of segments to analyze
performance of the hotel industry
• There are __________(market, tract) and
________ (scale, location) categorizations
• STAR Reports and corporate data files will
frequently compare a subject hotel to nearby
industry segments
• Publications and Destination Reports will also
display the performance of industry segments
 The Methodology for Industry
Data versus Comp Set Data
• The methodology used for arriving at industry
numbers is different than the one for arriving at
comp set numbers
• Actual data is used for hotels that participate and
“modeled data” is used for hotels that do not
participate
• The Actual and Modeled data is aggregated for
all hotels in each industry segment
 Modeling of Industry Data
• STR estimates the data of non-participating
hotels to help increase the accuracy of industry
data
• Data for a non-participant is estimated based on
participating hotels that are closest to the non-
participant based on geography and price level
• No modeled data is ever used in the Comp Set
numbers

Possible to explain technical procedure used for modeling

 Key Performance Indicators
for Industry Segments
• The Actual and Modeled data is aggregated for
all hotels in each industry segment
• Supply, Demand, and Revenue numbers are the
combined values of each hotel in the comp set
• Occupancy, ADR, and RevPAR numbers are
based on the aggregated Supply, Demand, and
Revenue
 Industry Supply, Demand, & Revenue
  A B C D E F G

1 Property Date # Rms Type of Data Supply Demand Revenue

2 11110 May-10 100 Actual 3100 2222 187654
3 22220 May-10 105 Actual 3255 2468 198765
4 33330 May-10 95 Modeled 2945 2345 223344
5 44440 May-10 90 Actual 2790 2456 234567
6 5550 May-10 110 Modeled 3410 3210 298765
7 6660 May-10 85 Actual 2635 2511 201234
8 7770 May-10 115 Actual 3565 3012 312345

9 Tract Scale   700   21700 18224 1656674

sum sum sum
10 (Formula)       (E2:E8) (F2:F8) (G2:G8)

Accumulate Actual & Modeled Supply, Demand, & Revenue

 Industry Occupancy, ADR, & RevPAR
  A B C D E F G H I J
# Type of Occu- Rev-
1 Property Date Rms Data Supply Demand Revenue pancy ADR PAR
2 11110 May-10 100 Actual 3100 2222 187654     
3 22220 May-10 105 Actual 3255 2468 198765     
4 33330 May-10 95 Modeled 2945 2345 223344     
5 44440 May-10 90 Actual 2790 2456 234567     
6 5550 May-10 110 Modeled 3410 3210 298765     
7 6660 May-10 85 Actual 2635 2511 201234     
8 7770 May-10 115 Actual 3565 3012 312345     
Tract
9 Scale   700   21700 18224 1656674 84.0 90.91 76.34
F9/E9
10 (Formula)       *100 G9/F9 G9/E9

Apply KPI formulas to accumulated raw data

 Percent Change Numbers
for the Industry Segment

• Percent Change numbers for the industry

segment are calculated exactly like the ones for
the comp set or the subject property
• These numbers show increases or decreases in
performance this year versus last year
 Multiple Time Periods and
Industry Data
• Multiple time periods are handled exactly the
same for an industry as for a comp set or a
subject property
• The Raw data for monthly and daily time periods
are always aggregated and then calculations are
derived based upon the aggregated data
 Sufficiency of Industry Data
• If an Industry segment has 4 or more hotels that
submit actual data, then that segment is defined
as “Sufficient”
• The numbers for that industry segment can then
appear on STAR reports and elsewhere
• Multi-year numbers are considered to be
sufficient if greater than 50% of the months or day
included in the multi-year period are sufficient
 Full Availability
• Occasionally a hotel in the industry segment may
report a Supply number that is different than the
number of rooms in the property times the days in
the period
• In those cases, STR uses the Supply number
based upon full availability, not the number that
the hotel reports
Corporate Data
 What do Companies Receive?
• Most corporate headquarters receive reports
listing each of their hotels and the various
performance metrics, referred to as “Index
Reports”. These may be subtotaled.
• Some companies receive “Summary Reports”
aggregating data for their hotels based upon
various subtotal groups.
• Many companies receive data files containing this
same type of data to use internally
 Who do Companies Compare
Their Hotels to?
• Most commonly, companies compare their hotels
to the corresponding comp sets
• Sometimes they compare their hotels to the
corresponding industry segment of the subject
property, such as a Market or Tract Scale
• They may compare total Brand numbers to the
corresponding Scale total, or to a group of other
brands, referred to as a “Corporate Comp Set”
 Corporate Aggregations
• Hotels can be grouped based upon common
fields such as Brand, State, or Operation
• Hotels can also be grouped based upon user-
defined variables, such as Sales Regions or Hotel
Types
• Raw data can be aggregated using Standard
Weighting or Portfolio Weighting
International
Issues
 Industry Segments
• In the US and in North America, probably the
most popular industry segment to compare hotels
to are Market Scale or Tract Scale
• The Scale category is totally related to chain
hotels
• Outside North America, since there are much less
chain hotels, Class is used instead and the poplar
segments are Market Class and Tract Class
Currencies and Exchange Rates
• Outside the US, most hotels want to see their
STAR reports in their local currency
• STAR obtains daily and monthly exchange rates
for all currencies in the world (at least the
countries that have hotels) from Oanda
• Daily data utilizes the daily exchange rate
• Monthly data utilizes the daily exchange rate for
the last day of the month
• Multi-year data is aggregated in local currency
Additional Data
 Additional Issues/Topics
• Segmentation Data (Group, Transient,
Contract)
• Additional Revenue Data (F&B, Other,
Total)
• Data within a Trend Report
• Data within a Hotel Review or Destination
Report