May 22, 2019
What’s Randy Smith been up to in the nearly 50 years since he got started in the hospitality industry, taking a job as a payroll clerk for United Inns, a Holiday Inn franchisee in Memphis, Tennessee, in 1970? Defining, standardizing, and revolutionizing hotel analytics. Smith Travel Research (now simply STR), the company he founded with his wife, Carolyn, in 1985, has turned ADR, RevPAR, and other metrics into invaluable benchmarking tools, and helped establish revenue guidelines for the entire hospitality industry. For that and much more, Smith is being honored with HSMAI’s Vanguard Award for Lifetime Achievement in Revenue Optimization, which will be presented at the 2019 Revenue Optimization Conference (ROC) in Minneapolis on June 18–19.
“It’s great to be recognized for your contribution to the industry when you’ve been involved in it for so long,” Smith said in a recent interview with HSMAI. “To realize that I have had an actual impact on how decisions are being made in this industry — it’s a nice little capstone to what has been an awesome career. Of all the industries to be involved in, the travel industry, hotels, are some of the nicest people in the world, and to be recognized by that group, it really is something that is very gratifying.”
Here are five other things we learned about Randy Smith and STR:
1. He got the idea for STR when he was a consultant. “I ended up in Orlando, Florida, in the research and development department of Laventhol & Horwath, a big accounting and consulting firm that has long since gone away. When I went to work for them, there were probably over 200 consultants that just worked on the hotel industry, and the research department worked to support those consultants, so that’s when I first got into tracking the performance of the hotel industry. I got transferred to the home office in Philadelphia, and at that point, I started pulling together all the data that was coming from all the different offices of Laventhol & Horwath and consolidating that data there. And then at some point I felt that this could be done a lot better. I wrote several memos and outlined how you could create a nationwide tracking system to really follow the performance of the hotel industry, but the firm felt that that threatened its feasibility study practice, and so they did not want to support it. So I left the firm in early 1985, and in June of ’85 my wife and I launched Smith Travel Research.”
2. His perspective grew along with the business. “In January of 1986, we got data from about 8,000 hotels to launch the program. Today, we collect data from, I guess, 65,000 hotels around the world. But it all started in the basement of my house in Pennsylvania, tracking occupancies, room rates, RevPAR. It was something the industry desperately needed, and the industry itself really wanted us to succeed and so they supported it heavily. I traveled all over this country trying to talk each brand into joining this tracking program, and generally I was very successful at it. When we first started, it was just a monthly program — we generated the data each month and we showed them how they were doing relative to their competition. Then, in the late ’90s, we launched daily tracking, which was daily data on a weekly basis.
“Back in, I’d say, the mid-’90s, we felt, ‘Well, that’s it, there’s no place else for us to grow.’ We had every major brand in the U.S. signed up. But then we went global. The brands continued to grow, they went global, and they wanted us to have our reports available globally. And so now, we pull data out of just about every major country in the world. China is one of our biggest countries at this point — we get data from thousands of hotels in China.”
3. He wants to deliver three things. “We have to be accurate. When they get our reports, they have to be confident that this is the correct data for them and for their competitors. They have to be able to rely on it. Confidentiality is the next one. We had to assure the industry that this information will not be shared with your competitors. Your information for an individual hotel and for an individual brand will be kept confidential. And we had to be timely. We had to be able to get the reports in and get that data back out to them in a timeframe that was usable, so they could really take this information and make decisions based on it.”
4. He’s seen everything change — including the phones. “When we first started, the internet didn’t even exist. All reservations where made by just calling the hotel directly. All the brands were separate, and there were very few publicly held companies — they were almost all private at that point, owned by the original founder or something. The industry going public put a lot of pressure on the industry to improve its flow of information, and so that was huge. Then came the next big phase, which was consolidation, where you had all the brands merging, and that’s a trend that continues to this day. The going public and the consolidation enabled the industry to generate a lot of investment dollars and it brought the investment community into the industry. When we first started, a lot of institutions really had nothing to do with the hotel industry. They felt it was entirely too cyclical, they couldn’t really track it. Today, there’s a wealth of information available on the hotel industry — not just [STR], there are other companies out there that provide other types of information — and it’s an accepted part of a lot of institutional and investment criteria now.
“And so, there were a couple of things that changed completely. One of the perfect examples that I always talk about is the telephone department. You know, the telephone department used to be crucial to a hotel, but it was always a money-loser. The industry realized that at some point, and they started increasing phone charges and they were really getting carried away with them. And today, does anybody even use their phone in a hotel room? They went from almost a 100-percent reliance on that phone in the room and at the front desk, and now, nobody pays any attention to it.”
5. He wants to tackle leakage. “The industry has always faced what we call ‘leakage’ — that’s everything from timeshares, cruise ships, whatever. It’s always been an issue, but now it’s gotten to be a fairly serious problem with all these people renting out their houses and their apartments. There’s all kinds of activity going on in the industry, and we’re working very hard at trying to get a handle on that information: Just how many dollars are flowing into overnight stays? And it really runs the entire gamut. We’re always trying to get a better handle on just how many nights are spent away from home — staying in hotels or staying outside of hotels. That’s going to be the big push over the years to come, is to just get a better handle on how much travel is going on that the industry just does not capture.”