HENDERSONVILLE, Tennessee—As the hospitality industry is constantly evaluating which amenities are most successful and drive the most revenue, brands tend to evolve their offerings. Specifically, the lines between full-service and select-service have blurred significantly during the past few years. Often times, for example, a single brand portfolio can feature some properties with a 24-hour restaurant as well as some properties with only grab-and-go food options.
To reflect the mashup of select- and full-service more accurately, STR and STR Global have revised the categories for their United States and global chain scales. Beginning in 2011, the midscale-with-food-and-beverage and midscale-without-food-and-beverage categories will no longer exist and instead the midscale segment will be divided as midscale and upper-midscale.
View/download STR's new chain-scale breakdown.
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Mark Lomanno |
“Over time, the categories as they were initially constructed evolve,” said Mark Lomanno, president of STR, which has been releasing the industry’s go-to chain-scale chart for 20 years. “As time has gone by, the lines have been blurred. Years ago, there was a big price differential between midscale-with and midscale-without. Now it makes sense to mash them together.”
The changes will take effect as STR and STR Global process January numbers and will first be reflected in weekly data released 9 February 2011 (for the week of 30 January-5 February 2011) and monthly data released mid-February.
What’s new
The new categories will be: luxury, upper-upscale, upscale, upper-midscale, midscale and economy.
In determining where brands fall within the categories, STR looks solely at the average daily rate across the entire portfolio, Lomanno said. There was a need to revise the ADR breaks for the midscale segment to better reflect the amenities offered throughout the segment, he said.
“It’s like the old Bill Parcells quote from when he was coaching the Giants: You are what your record says you are,” Lomanno said. “Your ADR is what it is. It makes it easier on us.”
The changes to the midscale segment led to the shuffling of some brands. For instance, Holiday Inn and Holiday Inn Express will reside in the same category (upper midscale) in 2011.
“We had a fair amount of play,” Lomanno said. “It’s not so much brand movement, but more of a recognition of who their competition was and reconfiguring it. We do give some consideration to who people name in their competitive set.”
Comparing the 2011 list to the 2010 list, other notable differences: Doubletree by Hilton was previously upper-upscale and will be classified upscale in 2011; 3 Palms was upscale and will be classified upper-midscale in 2011; and Extended Stay Deluxe was midscale-without-F&B and will now be in the economy segment.
America’s Best Inns & Suites, previously classified economy, will now reside in midscale, and Little America Hotels & Resorts, previously midscale-with-F&B, will reside in the upscale segment.
As Best Western rolls out its descriptor plan, the first year will see the core Best Western properties residing in the midscale category and Best Western Plus and Premier will reside in the upper-midscale category.
During the past few years, many franchisors have gone public with attempts to relaunch or reposition brands by asking owners to inject capital into properties by renovating and adding amenities. In most cases those brands remained in the same STR chain-scale category because they simply weren’t able to raise rates in 2010 as much as initially projected.
Lomanno said just because the repositioned brands didn’t move up this year doesn’t mean they won’t in the future.
“Unfortunately they picked the wrong environment to try and raise rates,” he said. “A lot of them have done (relaunches) in the last year or two (during a down economy). The chain scales are based on the previous year’s rates, and 2010 was a bad year, especially with a discounting environment.”