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      EI Interviews Vail Brown of Smith Travel Research

      Vail Brown

      The Educational Institute recently spoke with Vail Brown, CMHS, vice president, global business development and marketing for Smith Travel Research (STR) Global, about what the numbers say about industry prospects for 2013 and how STR is working with other organizations to certify people who know how to read and interpret vital industry data.

      Smith Travel Research is the recognized leader in hotel benchmarking, and obtains performance data from more than 70% of US hotels, and 50% of worldwide hotels. STR provides monthly, weekly, and daily STAR reports to 46,000 hotels around the world and maintains a census database of more than 150,000 hotels globally.

      Q: As we begin a new year, what were some of the successes of 2012?

      A:  Three main strengths marked a strong 2012.

      1) Record demand. The U.S. hotel industry set a record during July for the most roomnights ever sold in a single month with 105,954,122. Through November, the most recent monthly data available, U.S. hotels sold over 1 billion roomnights on an annualized basis an increase of more than 2.9% from the same period in 2011.

      2) Supply slowly rising. The number of hotel rooms under construction was up approximately 24% to 67,468 as of November. Existing supply crept up slowly during the year. March recorded a year-over-year growth of 0.2%, and each month following brought with it slightly higher supply. November finished with more than 145 million rooms opened in the country, which was up 0.7%.

      3) Rate Growth. While the U.S. hotel industry still hasn't reached its 2008 peak in average daily rate of $107.41, ADR growth continued. STR forecasts 2012 ADR growth to end up 4.4%. 

      Q: And what does the industry need to focus on for 2013?

      A: Supply - The number of rooms in the Pipeline is steadily increasing, and we expect to see new hotel openings throughout 2013, mostly in the limited- and select-service categories.

      Demand - We  expect the disconnect between negative headline news and positive market-level revenue-per-available-room news to continue.  Even though uncertainty from the election and economic instability globally, room demand broke records in 2012. We expect the rate of demand growth to slow in 2013, but hoteliers will once again sell more roomnights than ever before.

      ADR - Increasing room demand in markets with limited new supply will lead to more compression nights and pricing power for hoteliers.

      Shorter wait times in U.S. embassies - The best way to increase local tax revenues, increase hotel revenues and drive job growth is to welcome foreign tourists. The White House, together with U.S. Travel Association and a coalition of other trade associations have made inbound travel a priority. Visa wait times have decreased while visa demand continues to climb.

      More mobile bookings - Some travel startups are foregoing their desktop version of a website to go mobile and app only. Most suppliers to the industry are devising the better mousetrap for the mobile devices of choice, be it an app or streamline mobile website.  

      Q: What areas of the country/world will see the greatest hotel growth in 2013 and why?

      A:  In terms of construction pipeline, definitely China and India. The pace shows no sign of slowing in those countries, although due to the supply increases in recent years, we are starting to see performance growth slow in China and decline in India. In Asia/Pacific, I would say the next country to watch will be Indonesia, as it has a strong existing pipeline and a very buoyant economy.

      In the Middle East, the United Arab Emirates Pipeline is still incredibly strong; Dubai had a strong year in 2012, so seems to be absorbing the new supply, whereas Abu Dhabi is going in the opposite direction. Saudi Arabia's Pipeline is also growing, along with its performance and that is due to the increase in business travel to the country and the religious tourism in Makkah and Medina.

      Africa is growing in terms of supply-many of the Sub Saharan countries have larger Pipelines than existing supply. Nigeria continues to perform in ADR terms exceptionally-oil business, lack of supply, difficulty in getting projects built or opened, and security concerns all add to that.

      In Europe, the picture is less rosy, particularly in Southern Europe, with the ongoing recession, but economic worries remain throughout the Eurozone. London and Paris will continue to report strong performance, with consistently strong demand. Small RevPAR growth would be expected in most markets. In terms of supply, the largest Pipelines are in the U.K., Russia and Germany.

      Central/South America is not strongly growing in terms of supply, even in Brazil. Brazil should do well next year as the build up to World Cup and the Olympics begin, along with a strong economy. Increasing intra regional travel will also help the performance of other Latin America countries.

      Q: The STAR reports help hoteliers make the best possible business decision at any level; additionally it shows a property's aggregated performance.  However, newcomers to the industry don't quite know how beneficial this report is and/or dismiss it because they don't know how to read it or are intimated by it.  How can STR educate or help in this area?

      A: In 2010 STR created the SHARE (Supporting Hotel-related Academic Research & Education) center, to work with hospitality and tourism schools around the world by providing thorough and timely data for academic research, as well as providing comprehensive and relevant training materials for the classroom. In 2012, we took this concept a step further and created a student recognition certification, STAR Certification in Hotel Industry Analytics. The certification is being offered to undergraduate and graduate students through a joint effort between STR, EI and I-CHRIE (International Council on Hotel, Restaurant and Institutional Education).

      This is the only hotel-related certification for university students graduating from Hospitality and Tourism programs. The certification will confirm the student has demonstrated an ability to analyze various types of hotel industry data and to make strategic inferences based upon that analysis. The certification also confirms a comprehensive understanding of benchmarking and performance reports produced by STR. Achieving this distinction announces that these students have a place among the best graduates in their profession and opens the doors to the future career opportunities. 

      Q: At a recent hospitality roundtable hosted by the University of Phoenix and the Educational Institute, it was determined that some of the emerging concept within the realm of revenue management are relevant for short periods of time.  Some become outdated in less than one year. What are some of tactics STR uses to stay on top of these emerging trends and what advice might you offer to revenue managers?

      A: Our clients are clear: They want less data-but at the same time, they want more information. As hotels, brands, management companies, intermediaries and research companies, such as STR, collect more data points, the call for meaningful interpretation becomes ever louder. The winner will be who can serve up the best actionable information in the most user-friendly format to help hoteliers make better pricing decisions.

      Published Jan. 2013.

      Vail Brown is responsible for the overall coordination, the functional management and leadership of the sales and marketing strategies and activities for the STR Family of Companies. She is the chair for the AH&LA Women In Lodging (WIL) Council and for the HSMAI Foundation Board of Directors.

      About the American Hotel & Lodging Educational Institute
      Established in 1953 as a nonprofit educational foundation of the American Hotel & Lodging Association, the Educational Institute’s mission is to continue being the preferred provider to the lodging industry, hospitality schools, and related hospitality industries by developing and providing quality resources to train, educate, and certify hospitality professionals worldwide.