Understanding your STR reports: Percentage changes, indexes and comp set rankings

Knowing how to use each part of your STR report will bolster your ability to benchmark your performance and make better business decisions. Previously we introduced the three key performance indicators (KPIs). Now in this article, we will dive into year-over-year percentage changes, rankings within your competitive set and how to analyze your recovery from the pandemic against 2019 levels.

Percentage Change: 

Prior to the pandemic, year-over-year comparisons were essential in measuring success, whether for your own KPIs or the performance of your competition. Now with the pandemic impact to consider, this simple formula should be applied to more than just last year. We’ll get into that later in this piece, but for now, let’s assume year-over-year comparisons for the examples below.

Percentage Change:

• Day to Day (analyzing the same day for one year to the next): Friday, 22 January 2021 vs. the corresponding Friday in 2020 (24 January). Day-to-day comparisons are useful for both weekend and weekday levels. 
• Date to Date (analyzing the same date for this and last year): Date-to-date comparisons are mainly used for holidays that have a fixed date and have an impact on hotel performance, such as Christmas or New Year’s.
• Monthly comparison. Compares a specific month this year versus the same month in the previous year.
• Different periods (rolling 7-day, running 3-month, running-12 month, month-to-date, year-to-date, etc.): Percentage changes for these periods can take into account multiple performance influencers and benchmark through seasonality. For example, year-to-date November 2021 would compare average performance from January-November 2021 against January-November 2020.

While positive percentage changes imply an increase in your performance, you should always analyze your competition’s change as well to understand if they are growing at a faster rate—and if so, why. The same goes for negative percentage changes—is your performance decreasing faster than your competitors? If you are seeing a smaller decrease, this can indicate that while you are having a slower season than the previous year, which can be influenced by multiple external factors, you are still doing better than your competitors.

Indexes

Indexes provide a more in-depth view of how your hotel is performing within your competitive set. This helps determine if you are ahead or behind your competition in a specific metric. Treat “100” as the breakeven number for your index. If greater than 100, your property has exceeded its share of the market, while if below 100, you are underperforming as opposed to the rest of your set. Indexes are linked to the three KPIs—occupancy, average daily rate (ADR) and revenue per available room (RevPAR)—using following the formulas:

MPI or Market Penetration Index is calculated based on the Occupancy of the property and set.

ARI or Average Rate Index is calculated based on the ADR of the property and set.

RGI or Revenue Generated Index is calculated based on the RevPAR of the property and set. This can also be referred as Yield. Note that as per previous explanation on the three KPIs, RGI is considered the top index when looking at overall hotel performances.

Ranking within a competitive set

Rankings portray the position of your property against the performances of each of the competitors in your set. This is applied in each of the three KPIs.

Ranking is shown as X out of Y where X is the subject property and Y is the number of participating properties in the competitive set—reporting data different than 0*—which also includes the subject property. This also gives you a more granular view on how ahead/behind your property is in a certain metric. Ranking is only going to be available when looking at the comparison against the competitive set, not industry data.

*Properties reporting supply, 0 demand and 0 revenue are not included in the ranking. However, supply for those properties is taken into consideration while calculating the aggregative competitive set performance data.

Ranking changes

While ranking looks at the position of your property within the competitive set’s individual performances for a period selected, rank change evaluates how your property’s ranking has advanced or declined in comparison with your competitors. For example, if one of your property’s metrics moved up two as opposed to last year, and the other properties in your set have stagnated, your property rank change would be one out of six as this would indicate that you have achieved the most significant positive change.

Example: taking again the example of hotel X featured in our post, you can find below different scenarios on percentage change, ranking and index.

How to calculate your hotel recovery to 2019 levels

With the pandemic impact so extreme, 2020 performance was disregarded in many markets when benchmarking recovery. To compare more accurately, STR and much of the industry is using 2019 as the recovery benchmark.
 

Methodology on percentage change

To compare any period versus 2019, you would simply need to replace said period with the corresponding period in 2019*. The formula shown below uses 2021 vs. 2019 as the example.

Methodology on indexed Industry data

While following the same concept as above, the formula takes in account the same period for 2021 vs. 2019. This formula can be applied to all KPIS and raw data:

Conclusions

Year-over-year comparisons and rankings can further help calibrate your strategies, adding on to KPI analyses and providing greater understanding of performance patterns within a year. In our next blog, we will take a 90-degree turn from performance and competitive sets to focus on demand, supply, and pipeline data points, which are intertwined with market performance.

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For further insights into COVID-19’s impact on global hotel performance, visit our content hub.