Market Trends

Property categorization is a critical element of the hotel distribution process and hospitality market trends. It influences distribution decisions and the way various types of guests search, review and value choices about a property. Property differentiation is defined by the services hotels provide, size (measured in number of rooms), location and service quality (e.g., indicated by some subjective or community-based rating system). Properties are categorized in a number of ways, including star ratings, financial categorizations, branding and organization.

Star Ratings And Financial Categorizations

Major online travel agencies use subjective property categorization or star ratingschemes to differentiate properties. For example, Hotwire enables customers to choose a property based on the number of stars (without revealing the hotel brand). Expedia enables sorting by its own proprietary star ratings. For the most part, star ratings are consistent across major online sites on the top (five or more stars) and bottom (one star) of the scale. Interim ratings or stars are associated with the availability of onsite F&B (food and beverage), business services and a pool. Star ratings suggest some subjective evaluation of ambiance. Slotting properties is a balance between informational integrity and commercial return. The process also maps to financial and statistical categories.

Hospitality Market Trends

Financial categorizations are important for branding, marketing and distribution decisions. Industry statistics, particularly those associated with hospitality market trends and public financial performance reporting, are tied to categorization. Average daily rate (ADR), occupancy, per-sleeping-room cost and the relationship of room-to-total hotel revenue can vary substantially based on the type of property. An economy property has a much lower ADR and cost per room than a luxury or resort property. Depending on location, economy properties also have much less cyclical and seasonal variation in occupancy

Major chains typically align their properties using multiple brands. Each brand is marketed differently through variations in loyalty programs, pricing, corporate negotiated rate programs, advertising and alternate uses of the distribution system. Decisions about the mix of brands for a particular chain or management company and the means to distribute those brands can substantially influence performance results for hospitality market trends and within a financial (or brand) category.