STR Explained: A Complete Guide to Hotel Benchmarking and Performance Analysis

STR is a hospitality data and benchmarking company that helps hotels understand their financial and operational performance in comparison with the wider market. Originally established as Smith Travel Research, the business became known for collecting hotel performance data and turning it into useful comparisons for owners, managers, investors, and revenue specialists.

Hotel operators can measure their own room sales and revenue relatively easily. Understanding whether those results are competitive is more complicated. A hotel might achieve strong occupancy while earning less per room than similar properties. Another might sell fewer rooms but produce better overall room revenue.

This is where hospitality benchmarking becomes valuable. By comparing performance against suitable competitors, hotel businesses can identify opportunities, investigate weaknesses and make more informed commercial decisions.

Today, CoStar Group, which acquired the business in 2019, provides the company’s benchmarking services.

This guide explains its background, how hotel benchmarking works, which measurements matter most, and what businesses should consider before relying on market comparisons.

What Is STR?

STR is a specialist provider of hotel industry data, benchmarking, and hospitality market intelligence. Its central purpose is to help accommodation businesses evaluate performance using information collected from participating properties.

Rather than assessing a hotel in isolation, the service lets users compare key indicators with aggregated data from similar hotels.

Comparisons can cover room occupancy, pricing, revenue performance, and broader market conditions. They help hotel operators determine whether changes in business results reflect internal decisions, local competition, or broader industry trends.

For example, a decline in room revenue may initially appear alarming. However, if the surrounding market declined more substantially during the same period, the hotel’s relative performance may be stronger than its financial results alone suggest.

The distinction between absolute performance and performance relative to competitors is central to hotel benchmarking.

The History and Development of STR

From Smith Travel Research to an International Business

Randy and Carolyn Smith founded Smith Travel Research in 1985. Its original work focused on hospitality industry information, particularly hotel market data and performance measurement.

When accessing consistent competitive information was more difficult, standardized reporting gave hotels a way to evaluate results beyond their own records.

Over the following decades, the organization expanded its activities and developed into an international hospitality intelligence business.

Its services became associated with hotel performance reports, competitive benchmarking and industry research used by hospitality professionals.

The CoStar Group Acquisition

CoStar Group announced its planned acquisition of the company in October 2019 and completed the transaction on 22 October that year.

The acquisition connected hospitality benchmarking expertise with a wider commercial property information and analytics business.

The company’s established hotel data operations subsequently became part of a broader portfolio of property intelligence products.

The current CoStar with STR Benchmark offering combines hotel performance comparisons with other commercial property and hospitality insights.

Although the product experience has evolved, measuring hotel results against relevant market performance remains central.

How Does STR Hotel Benchmarking Work?

Hotel benchmarking involves comparing a property’s performance with a carefully selected group of comparable hotels or a relevant market segment.

A hotel provides operational performance information, while the benchmarking service processes data from participating properties to produce aggregated comparisons.

The process generally follows several stages.

1. Collecting Hotel Performance Data

Participating hotels report information such as available rooms, rooms sold, and room revenue.

Accurate reporting is essential because misleading inputs can affect comparison quality.

For instance, when calculating room-specific performance measures, distinguish room revenue from revenue earned through restaurants, parking, spas, or other hotel operations.

2. Selecting a Competitive Set

A competitive set, commonly shortened to comp set, is a group of properties against which a hotel compares its performance.

The most suitable competitors are not necessarily the nearest buildings. Hotel category, location, facilities, target customers, service standard, and room count can all influence whether two properties compete for the same guests.

A budget hotel near an airport may have little in common with a luxury destination resort, even if both operate within the same region.

Choosing inappropriate competitors can make a hotel’s results appear stronger or weaker than they actually are.

3. Comparing Performance Indicators

Once the relevant information is available, the service can show how the subject hotel performs against the selected comparison group.

These calculations help managers understand whether occupancy, room rates, and revenue are above or below comparable market averages.

4. Interpreting the Findings

The figures become useful when hotel teams connect them to commercial decisions.

A property with relatively weak weekday occupancy may investigate business travel demand, local corporate relationships, or the timing of marketing campaigns.

Another hotel with strong occupancy but weak room rates may review its discounting strategy.

Benchmarking identifies patterns worth investigating; it does not automatically explain why they occurred.

Important Hotel Performance Metrics Explained

Understanding a benchmarking report requires familiarity with several hospitality measurements.

Occupancy Rate

Occupancy measures the proportion of available rooms sold during a given period.

Formula:

Occupancy Rate = (Rooms Sold ÷ Rooms Available) × 100

A hotel with 100 available rooms that sells 70 rooms in one night records an occupancy rate of 70%.

Occupancy helps describe demand, although a higher figure does not automatically indicate greater profitability.

Average Daily Rate (ADR)

Average Daily Rate measures the average room revenue earned for each room sold.

Formula:

ADR = Room Revenue ÷ Rooms Sold

If a hotel earns £12,000 in room revenue from 100 rooms sold, its ADR is £120.

This indicator helps you understand pricing performance, but it does not show how effectively the full room inventory has been used.

Revenue per Available Room (RevPAR)

Revenue per Available Room combines elements of occupancy and room pricing.

Formula:

RevPAR = Room Revenue ÷ Rooms Available

You can also calculate it by multiplying ADR by the occupancy rate (as a decimal).

For example, a property with an ADR of £120 and 70% occupancy produces a RevPAR of £84.

RevPAR is widely used because it measures room revenue relative to available inventory.

However, RevPAR is not the same as profit. It does not deduct staffing, energy, maintenance, distribution fees, or other operating expenses.

Revenue Generating Index (RGI)

Revenue Generating Index compares a hotel’s RevPAR with that of a relevant competitive group.

Formula:

RGI = (Hotel RevPAR ÷ Competitive Set RevPAR) × 100

An index of 100 indicates that the hotel’s RevPAR equals the comparison group’s RevPAR.

A figure above 100 indicates stronger relative room revenue performance, while a figure below 100 indicates weaker relative performance.

These comparisons provide context, but their usefulness depends on selecting an appropriate competitive set.

Practical Example: Understanding Hotel Benchmarking Results

Consider the following hypothetical hotel. The figures are illustrative, not actual company or market data.

Metric	Example Hotel	Competitive Group
Occupancy	70%	75%
Average Daily Rate	£120	£110
RevPAR	£84	£82.50
RevPAR Index	101.8	100

At first glance, the hotel’s lower occupancy might suggest that competitors are attracting more demand.

However, the example hotel earns a higher average rate, resulting in slightly stronger RevPAR than the comparison group.

Its Revenue Generating Index is approximately 101.8.

This suggests the property generates more room revenue per available room than its competitors, despite selling a smaller share of its inventory.

The hotel manager might therefore investigate whether increasing occupancy through discounts would genuinely improve revenue or reduce the average selling price.

The example demonstrates an important principle: strong revenue management requires more than maximizing room bookings.

Why Hotel Businesses Use STR Data

Improving Pricing Decisions

Hotel room prices often vary with demand, seasonality, customer mix, and local events.

Competitive information helps revenue teams assess whether existing prices are appropriately positioned in the market.

A hotel consistently charging less than comparable properties may have an opportunity to reconsider its pricing, provided its product and customer expectations justify the change.

However, competitors’ performance should not be treated as an instruction to copy their prices.

Understanding Seasonal Demand

Hotels experience different booking patterns throughout the year.

Coastal properties may depend heavily on holiday periods, while business-oriented hotels can experience stronger midweek demand.

By comparing historical data, businesses can identify recurring shifts in market performance and plan staffing, pricing, and marketing more realistically.

Evaluating Business Strategy

Benchmarking offers another way to evaluate commercial initiatives.

For instance, management might introduce a revised corporate booking strategy and then examine whether weekday performance improved relative to competing hotels.

A positive result does not prove the strategy alone caused the improvement, but it provides evidence to support a broader evaluation.

Supporting Investors and Owners

Hospitality investors need to understand how properties perform within their markets.

Revenue trends and competitive positioning can inform decisions about acquisitions, improvements, operational changes, and long-term investment plans.

These measurements are most useful when considered alongside costs, financing, physical property condition, and local market risks.

Who Can Benefit From STR Benchmarking?

The service applies to several professional roles.

Hotel owners can evaluate asset performance and examine whether management strategies are producing competitive results.

General managers can investigate operational trends and link revenue outcomes to broader business planning.

Revenue managers can examine occupancy, average room rates, market positioning and pricing performance.

Sales and marketing teams can identify periods when they may need additional demand and review the effectiveness of commercial campaigns.

Hospitality investors and asset managers can use comparative information to support financial analysis and market assessments.

Independent hotels may also benefit, provided the comparison groups are suitable and the information’s value justifies the service cost.

Data Confidentiality and Competitive Comparisons

Hotel benchmarking involves commercially sensitive information. Individual hotels generally do not want competitors gaining unrestricted access to confidential room revenue or occupancy records.

The benchmarking system addresses this by using aggregated comparisons and restricting how competitive information is reported.

Its published competitive-set guidelines establish requirements for participating properties and ownership diversity to help prevent individual hotel results from being isolated.

For example, the standard guidelines require a competitive group to include at least four participating properties beyond the subject hotel, with additional independence requirements.

These protections are important because an otherwise useful comparison could reveal confidential commercial information if the group were too small or dominated by a single operator.

Participants should still review current confidentiality policies, contractual access permissions and data-sharing arrangements before joining.

Limitations of Hotel Benchmarking Data

Although industry comparisons can be valuable, they should not replace professional judgment.

Comparisons Depend on the Selected Hotels

A competitive group that doesn’t reflect a property’s true market position can lead to misleading conclusions.

Managers should review whether the comparison remains suitable after local hotel openings, renovations, closures, or changes in brand positioning.

Data Coverage Can Vary

Not every hotel participates in the same reporting arrangements. Some markets may contain more reporting properties than others, and individual data submissions can be delayed or incomplete.

Users should understand the reporting sample, coverage, and methodology before drawing major conclusions.

Revenue Is Different From Profitability

High room revenue does not necessarily indicate strong financial health.

A hotel may outperform competitors on RevPAR while experiencing higher staffing costs, financing expenses, or building maintenance requirements.

Profitability analysis therefore requires additional financial information.

External Events Influence Results

Weather disruptions, transport changes, local events, and shifts in travel demand can affect hotel performance.

Benchmarking can reveal the scale of a change but cannot always establish its cause.

The strongest approach combines quantitative data with operational experience, local knowledge and financial analysis.

How to Use STR Reports Effectively

A hotel business can improve the usefulness of benchmarking information by following a consistent review process.

1. Establish clear objectives. Decide whether the priority is pricing, occupancy, room revenue, customer demand, or broader property performance.
2. Choose suitable competitors. Select properties that genuinely compete for similar guests and meet the provider’s reporting requirements.
3. Check data consistency. Confirm that room inventory, revenue classifications, and reporting periods are correct.
4. Review several performance indicators. Avoid treating occupancy or ADR as the only measure of success.
5. Compare meaningful time periods. Consider seasonality, special events and changes in the local hotel market.
6. Investigate unusual results. Look for operational and commercial explanations rather than assuming a change reflects a single cause.
7. Review decisions over time. Measure outcomes after implementing changes, while recognizing that multiple factors can influence performance.

This process turns benchmarking from a reporting exercise into a practical part of business planning.

STR and the Future of Hospitality Analytics

Hospitality businesses increasingly need to understand the relationship between room demand, pricing, distribution costs and financial performance.

Hotel analytics is therefore moving beyond simple historical comparisons towards broader commercial decision-making.

The CoStar with STR Benchmark offering reflects this direction by bringing hotel performance intelligence into a wider property analytics environment.

For users, the central challenge remains unchanged: data is valuable only when it is accurate, relevant and interpreted appropriately.

Technology can improve access to performance information, but effective decisions still require understanding local customers, hotel operations and the wider economic environment.

Businesses that combine reliable benchmarking with clear financial objectives are better positioned to evaluate their choices than those relying on a single headline metric.

Frequently Asked Questions

1. What does STR stand for in the hotel industry?

The company’s name originated from Smith Travel Research, a hotel data and benchmarking business founded in 1985. Today, STR is the established brand name for its hospitality analytics services.

2. Is STR owned by CoStar Group?

Yes. CoStar Group completed the acquisition in October 2019. Its hospitality benchmarking services are now connected with the wider CoStar product environment.

3. What is an STR report used for?

A hotel benchmarking report helps businesses compare their occupancy, average daily rate, and revenue performance with relevant competitors or market groups. It provides context for pricing, revenue management and business planning.

4. Can independent hotels use hotel benchmarking services?

Independent hotels can participate, subject to the provider’s eligibility requirements, data submission, and subscription arrangements. The service’s usefulness depends partly on the availability of appropriate comparisons.

5. Does STR provide individual competitors’ confidential hotel revenue?

The provider operates confidentiality controls and generally reports competitive information in aggregated form. Access to individual property information is restricted to authorized parties.

6. Does a higher RevPAR always mean a hotel is more profitable?

No. RevPAR measures room revenue per available room, not net profit. When evaluating overall financial performance, you must also consider operating expenses, other revenue streams, and financing costs.

Final Takeaway

STR has played an established role in developing hotel benchmarking by helping hospitality businesses compare performance against competitors and broader market conditions.

Its value comes from placing familiar measures such as occupancy, average daily rate, and RevPAR in a meaningful competitive context.

For hotel owners, revenue specialists, and investors, the most useful lesson is that you can’t judge performance accurately from one figure alone.

Reliable data, suitable comparisons and careful interpretation provide a stronger foundation for commercial decisions than relying entirely on internal revenue figures or assumptions about competitors.

The business’s current association with CoStar Group also illustrates how hospitality benchmarking has become part of a wider approach to commercial property intelligence.

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