Smart hoteliers use benchmarking strategies to understand their properties’ performance compared to historical data and compared to their competition.
Generally this is done by comparing figures – whether for occupancy, ADR, RevPAR or another metric – from one period to the same period one year prior.
Then came 2020 – a year when travel came to a halt due to the COVID-19 pandemic, skewing the data so dramatically that it is meaningless as a point of reference.
During a session of STR’s virtual Hotel Data Conference this week, The Next Normal: Benchmarking Post Pandemic, the company’s vice president of analytics, Isaac Collazo, says hoteliers have to think differently about benchmarking for the next couple of years.
With all traditional metrics at record lows during 2020, the gains that are already materializing in some markets can be interpreted with too much optimism if compared as percentage increases year-on-year or month-to-month.
“Once we get back to ’23, then traditional benchmarking starts working again,” Collazo says.
For now, Collazo advises hotelier to use indexes: picking a specific point in time pre-pandemic and measuring current data against that point.
“This is a simple, easy way to measure your progress in recovery because now you can say I had double-digit gains every month, but even with double-digit gains I’m not back to where I was in 2019 or 2018, whichever the
case may be,” Collazo says.
“There’s even been talk of using a five-year average – the five years ending in 2019 – and benchmarking against that. Once you set that level, that foundation, then … it lets you map out that recovery.”
Data from a hotel’s direct competitors can also be incorporated in the index so hoteliers can track their progress relative to their market.
Collazo says larger hotel portfolios should segment their properties – for example by size or type of market – to provide a more useful analysis.
“The beauty is then I can quickly check my portfolio and see what’s coming back sooner, faster, where I should prioritize,” he says.
“That’s the idea of benchmarking; it’s about getting your focus, knowing where you should look rather than trying to do everything shotgun approach.”
In addition to looking at historical data, hoteliers should also analyze their future reservations.
“If you are ahead in forward bookings but always behind when the days pass, then you really need to find out what’s going on,” he says.
“Are people booking my hotel and then doing something differently? And the question is why. That’s why you want to have this data to ask the right questions.”
And as the alternative accommodation sector continues to grow – in fact accelerated by the pandemic – hoteliers should also “remove their blinders” to understand what is going on across the total accommodation market in which they compete.
“You need to broaden that view to know what’s leaking, what’s going to someone else that you didn’t know because you were only looking at one aspect: hotels. So total accommodation [reports] should be important to all
hoteliers,” Collazo says.