Follow the STAR

Star Report, if analyzed and studied correctly, is possibly the most important tool for your rate and inventory management, vice versa, misunderstanding the Report or analyzing it inaccurately could be damaging.  

The common mistakes are grading a hotels performance on STAR Ranking or OCC / ADR indexes alone;  ignoring the patterns and failure to balance OCC and ADR Indexes.   RevPAR index is the direct result of the Comp Set performance; a strong Comp Set could send the RevPAR index to 40% or less and a weak Comp Set will result in index over 200-300%. Neither explains how that individual hotel is doing in the market; all it says is how the hotel does comparing to that specific set of the hotels.  

Most of the hotels choose a fair set of hotels as Comp Set; however the concept is still the same. The RevPAR Index by itself could be misleading; we must look closely to the changes and trends of the RevPAR Index.  A consistently 70% Index hotel performs greatly is increases to 80% due to hotel operations/marketing and the other who is consistently 120% has lost business to market if it drops to 110%.  This 110% by no means is the proof that the hotel is 10% ahead of the market. 

The hotel operators should look at the trends and patterns in the STAR Report, analyze the trends and patterns and accordingly manage their rates and inventory. The Report could be and is an invaluable tool if used for this purpose. The Report must be analyzed every week and should be used to pin point the changes in feeders, supply/demand changes and rate fluctuations.  

In most cases the changes in the RevPAR Indexes are caused by most basic issues; a hotel in the Comp Set could stop reporting.  In one of my hotels we could not understand the reason for change in our Index until we realized that one of the hotels in the Set has stopped reporting.  One of the other common reasons has been the malfunctioning of photocell or timer that controls the outside lights and signs.  Road construction, change in the Comp Set operations and/or marketing tactics, failure to pay TA Commissions and CRS problems are few other reasons to consider.

STAR can easily be misunderstood if the external changes are ignored.  As example; the RevPAR Index increases sharply in a hotel while the actual revenue drops. The first assumption blames the market and concludes that the hotel has not suffered much from the market.  But that also could be because of opening of a new hotel that has crushed your top Comp Set hotel. Extreme drop in that Comp’s indexes will result in increase in your hotel index, but that does not mean that the hotel is doing better.  

In a similar case, if the weakest member of your fair Comp Set drops out or stops reporting, your Indexes will fall. That drop in ADR Index does not mean that your hotel is losing revenue.   

Accurate analyses of the Report will result in better rate and inventory management, targeted sales and even staffing / labor cost and structure.  Combining it with hotel’s own historical data and integrating them in a simple Excel sheet can make wonders for every hotel.  Following this STAR will do you good.   The Report can increase your revenue, bottom line and the RevPAR index by 10-20% if used correctly; at least that has been the case for most of my hotels.   

Following the STAR will brighten the rugged road of Rate and Inventory and helps you to manage the road ahead.