GMs must monitor performance; what are the challenges with benchmarking and obtaining hotel performance data in UAE?
Sami: We wanted to talk about the third parties, like STR Global; all hotels are using STR to report everything and sometimes the owner…compares us, the brand, to the others through the third parties but some figures are wrong because some hotels are including breakfast and some taxes, so you cannot compare. There is a real issue on which kind of figure we are talking about.
Klaus: There is an issue in the reporting of data to the third parties.
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Eddy: Basically, one of the KPIs that we measure in hotels is revenue generation per available room and you compare that to your competition through an index so we call it RevPAR index, that’s the main component we look at.
STR is one of the companies in the region that’s doing that. This is very important because in most hotels this is part of your performance tests with your owner on the hotel management agreement, so you have to maintain a certain level of competitiveness in the market.
Hotels deliver the figures on a daily basis to STR then STR compiles everything. They would send me my information compared to my five competitors, not one by one but to the whole comp set.
But if I like to report my net figures, as we say, with no inclusion of taxes, service charge or breakfast, another hotel might be including all those, so suddenly your average rate increases by AED 100, which doesn’t make any sense.
So it’s not a fair ‘apples to apples’ comparison and with owners becoming more and more engaged with the results of the hotels in today’s world, this is becoming an issue.
DTCM’s role here could be regulating this and making sure we put a standard whereby the hotels are audited on the information they share with STR and then an agreement would be done with all the hotels on how to share information.
Klaus: The problem is as well, they do have guidelines and they clearly say that you cannot include apartment revenue and you cannot include breakfast, but the problem is they don’t really know what’s inside the numbers [hotels] send.
Eddy: The only way they can check is to compare the day to day data you send them with the month end data, but if you’re reporting in a certain manner on a day-to-day basis, you can always report at the month’s end as well so you don’t see that discrepancy.
Sami: When you see in your market the average rate is double your rate, something is wrong there. So STR is not happy to do the policing and checking the figures, they don’t have the right to do it, but we are not comparing the same things so this is a big issue for a lot of hoteliers. You have some hotels really not playing fair.
Heinrich: It is important to know how exactly the hotels in one’s comp set are calculating their RGI performance. A close relationship with your comp set is essential to obtain clarity on the method of calculation. In areas where discrepancies with the STR guidelines exist, they need to be addressed and rectified, if that is not possible then you should change your comp set.
Mark: The service charge element is still being added to STR reports by many operators; to such an extent that STR now recommends the percentage to factor in, in order to compare ‘apples with apples’ data. Clearly the easiest way would be for all properties to be open and honest when reporting ARR figures — without the inclusion of service charge allocation, municipality fees, and without any breakfast allocation.
Serge: The challenge with benchmarking and obtaining hotel performance data is the discrepancy of data which is used. There is a lack of consistency for room revenue reported to firms like STR, one of the reasons being the service charge.
For example, some hotels report the total room revenue including service charge, others take it completely out, and others calculate it partly in the figure. A common standard of how hotels and resorts report their numbers would definitely help with having a correct benchmark for the industry.
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