Evolution in benchmarking: Composite Comp Sets

In October 2020, STR launched the Composite Comp Set, an evolution of competitive set benchmarking that will provide hotel industry stakeholders more flexibility and control in an ever-evolving global marketplace.

Comp sets are an integral piece of the STAR Report, the benchmark by which properties, brands and parent companies measure their performance. Over time, however, hotels have been faced with more challenges in choosing their comp sets, even as industry confidence in STR’s neutrality and commitment to confidentiality has led to an unparalleled sample—68,000 properties representing 9.1 million rooms worldwide.

The Composite Comp Set is not better or worse than the traditional Comp Set, and this new solution doesn’t cost any more. It is all about flexibility.

The challenge

That commitment to confidentiality can occasionally impact operators as they create new comp sets or maintain existing comp sets over time. STR’s isolation and sufficiency rules, developed to protect property-level data, restrict the percentage of rooms in a comp set belonging to a single property, brand or parent company, while also requiring a minimum of four member properties per set. Any changes to a hotel in the set—because of property closures (temporary or permanent), conversions or affiliation changes due to M&A activity—can shift those percentages in excess of STR guidelines, rendering the comp set non-compliant.

A notable example came in 2016 when Marriott International acquired Starwood Hotels & Resorts, leading thousands of comp sets to “go dark” virtually overnight. More recently, COVID-19 created new challenges as hotels temporarily closed in unprecedented numbers.

Over 20% of hotel rooms worldwide closed temporarily in 2020, causing many competitive sets to “break” as member properties stopped reporting data. Many of those closed rooms have since re-opened, and only 2.3% of global hotel rooms remain closed at the time of launch. However, as closure time lengthens, the likelihood of permanent closure rises, threatening total hotel supply and comp set options.

The solution

Composite Comp Sets solve isolation and sufficiency concerns via the addition of a Composite Property to a normal comp set. The Composite Property pulls together anonymized hotel data selected via a proprietary methodology. Each Composite Property is then weighted to form a single competitive property. The exact number of hotels, as well as their identity, is masked, which allows the composite property significant flexibility within the comp set.

Additional flexibility to change your comp set

Unlike a named comp set member, a Composite Property can be added or removed from a comp set with another property or individually, sidestepping STR’s “rule of two” and avoiding isolation of any one property. Single additions and removals allow operators to maintain comp set stability even if other, named comp set members temporarily or permanently close.

The Composite Property also can be used to satisfy the rule of two, helping operators to obtain their ideal competitive set without adding nonideal properties or removing valued comp set members.

Regain sufficiency and maintain integrity

Even with four or more properties reporting, comp sets can break if STR’s composition rules aren’t met. Adding a Composite Property—which does not belong to a brand or parent company—can often solve this problem, and the product’s flexible weighting maintains the original comp set’s integrity. Composite Properties are weighted to the minimum number of rooms required to recover sufficiency, thus maintaining the historical comp set trend and minimizing its impact on the comp set.

The world’s best hotel sample

While flexible weighting reduces a Composite Property’s impact on a comp set performance, the proprietary methodology used to create the Composite Property ensures that it operates as a true competitor to the subject hotel.

The chart below highlights the similarities between subject “hotel*” and Composite Property RevPAR. The metric and its trend are strikingly similar, even over the past six months during the COVID-19 pandemic.

Composite Property data is not scraped, modeled or manipulated in any way; this data is, in a sense, a comp set within a comp set, where actual hotel data is aggregated and weighted to represent a certain number of rooms. An innovation such as the Composite Comp Sets is only possible with a sample as extensive as STR’s.

Quality over quantity

Composite properties are unique; STR’s Composite Comp Set methodology emphasizes property attributes and performance to create a completely custom property using real hotel data. As a result, not every property in the world can use a Composite Comp Set, but the product is an option for roughly 85% of STR’s current hotel sample globally.

Read more about Composite Comp Sets here. For questions, please contact your Account Manager. Interested in adding a Composite Property to your existing competitive set? Email our Client Support specialists at support@str.com.