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Isaac Collazo from STR

• Jeff Borman and Matt Brown

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Isaac Collazo is VP of Analytics at STR, Smith Travel Research, THE global leader in hospitality data benchmarking, analytics and marketplace insights. What does that mean? It means when it comes to hotel numbers, nobody understands them like Isaac, but what he really understands, Moneyball style, is the story behind the data.

We get into STR reports, what metaphor Isaac would use to describe the first half of this year, the future of extended stay, how a new U.S. president would affect the hotel industry, the difference between office vacancy stats and hotel vacancy stats, and a GREAT mystery question.

https://str.com/
https://podcasts.apple.com/us/podcast/tell-me-more-a-hospitality-data-podcast/

Isaac Collazo:

Jan and I actually do it live. We never. We don't, unless I said something wrong. Once we've had to edit, where I literally just said something was wrong and I said yeah, I missed that number. Can we just take it out? Okay, perfect.

Jeff Borman:

Last year when we met with Jan, he was like you guys are far more organized.

Matt Brown:

That's the only time I've ever heard that in my life.

Jeff Borman:

Literally I had to. That's why it stuck with me.

Matt Brown:

It's the only time I've ever heard that. Hi everybody, it's no Show. I'm Matt Brown, joined as always by Jeff Borman. Isaac Colazzo is VP of Analytics at STAR Smith Travel Research, the global leader in hospitality data, benchmarking, analytics and marketplace insights. What does that mean? It means that when it comes to hotel numbers, nobody understands them like Isaac. But what he really understands Moneyball style is the story behind the data. He understands the narrative and consequences of a numbers-obsessed business. If an MLB team had gotten to him first, he would have three World Series rings already. It's not too late Atlanta Braves. He co hosts with Jan Freitag the excellent Tell Me More Hospitality Data podcast, and we are pleased as punch to have him as a guest today. Isaac, welcome to no Show.

Jeff Borman:

Thanks, matt. Hi Jeff, last year we were very fortunate to have your friend and partner, jan Freitag with us and I started to get in the weeds about Star Reports and he couldn't get out of it fast enough, pointed me your direction and a year later here we are. I got questions on Star Reports. We're not going to talk about them the whole time. There's more interesting things but there's a big, huge audience out there with bonuses and weekly what did you do for me? Owner calls. I've been on both ends of those calls. So here's a couple things that kind of want to get to brass tacks right. There haven't been updates to Star Reports in decades. I think faxing was a preferred method of communication at the time they were created. Not much has changed. Why not?

Isaac Collazo:

Actually, well, I don't know if the reports themselves have changed much. The delivery definitely has changed a lot, right. So even in my position prior position with IHG we didn't get the traditional reports right. We got data which we then put into our own systems and lots of companies do that right. We got data which we then put into our own systems and lots of companies do that right. And even back, if you can believe this, jeff back in the late 90s, early 2000s, when I was at Promise, we actually designed our own reports using just the data. So back in, that's a long time ago, where we created our own reports and that, thinking back, that's amazing. We did that.

Isaac Collazo:

But what we're doing now is completely different. So you're probably aware that we were acquired by CoStar in October of 2019. So we're part of CoStar's big real estate family data family. Little by little, we're actually integrating into that CoStar platform. So, essentially, str has always been a push type data delivery. We push it to the clients.

Isaac Collazo:

Well, now we're going to the pull strategy, where you will have your login, you can pull the data at any time, and what that's going to let us do is again the way it was designed back in the day. It was a pretty static system, right, so it was monthly or daily. But with the CoStar system in time, basically anything's possible now because it's a live system and you can pull it whenever you want. You can pull what data you want. You won't be limited Like the old star reports. You could only whatever was on that page or pages.

Isaac Collazo:

That's all you got With CoStar as a subscriber. You can go, look at other markets, you can create unlimited comp sets, you can do a lot, and then on the backside, my team and I will be the innovation side. So right now you're not seeing much innovation. You're seeing some better use or better ways to get the data. But in the future, after integration is done, then we'll be talking innovation and saying, okay, how do we use this data differently? How do we present something to our clients differently? So that's what we're looking forward to.

Jeff Borman:

You know, maybe that will enable, then, a change from the year-on-year comparison and the date match basis, one of the, I think, most common frustrations and you hear, actually, the other end of this on HNN all the time which is the value of events, these one-off? You know, you had the Super Bowl, you had Lollapalooza, right, and the winner of that event is predetermined by year-over-year metric to lose the next one, and it all comes out in the wash but nobody learned anything when the real winner, the one that capitalized on the market opportunities, not rewarded. Does that finally change?

Isaac Collazo:

Yeah, it will. I mean you just have more flexibility as the user. You'll get the data and you can manipulate it the way you need it right. That's the key For me as a client. Back in the day, back in IHC days and Internet Marriott days, I mean I was pulling data and manipulating it the way we needed it so we could create our forecast, we could create the budgets, whatever is required with that data. So I think that's the flexibility that something on an online system will give you versus a static report. You define it the way you want it right. Basically and there'll be some in the reports already on the online, there is some flexibility on days and dates and things, but in the future there'll be more. Right now we're still doing the lift and shift Take it from the old system into the new system.

Jeff Borman:

Right now we're still doing the lift and shift take it from the old system into the new system. Is it still going to be comp set, required or limited to what hotels predetermined? Right, these are my five hotels and at that point you're just limited in the amount of visibility, or?

Isaac Collazo:

wide open. It's wider. Right now, the benchmarking clients that we've migrated to the costar platform can have unlimited comp sets. So you can create. There's some you know parameters. There has to be someone overseeing, like you don't want every hotel creating thousands of comp sets, right. So however you receive your data and however the subscription is, whoever manages the subscription, you, the user, can now create things. Like you know. Right now you have your comp set in the corner, your corner comp set right, the hotel's closest to you. But what if you want to benchmark, like hotels in different cities, to check out that opportunity? So you want to say, hey, I'm a 500-room hotel, I want to really see what other 500-room hotels are doing and let me benchmark against them in these selective cities that are like me, and then now you'll be able to do that right. So it's the flexibility is that's what's going to be key with the new system. It's just very flexible.

Jeff Borman:

From a data management standpoint, I'm already excited From the limitation that comes with management agreements. I think we're still going to be tied into a lot of old behavior. From a pure math standpoint, at what number does a hotel not have a relevant comp set?

Isaac Collazo:

I don't know. I mean, I think it depends on what you mean relevant, right? I've seen, even in my prior jobs I've seen hotels with 19 competitors in their comp set and you go what are you really doing? That's more of a market right. So I don't know. It depends on how you define relevant.

Isaac Collazo:

To me, as I think about it, from getting my marketing hat on back in the day, I want to really benchmark. Let me this is a better analogy. I started thinking I run, I've run for years. Well, I can't benchmark myself against 19-year-olds. I'm going to lose every time, right, I mean, that's the fact. But I can benchmark myself against males my age and then really start and see how I improve.

Isaac Collazo:

And I think the same thing with with comp sets. That's what there is. You've got to find that, that competitor that's like you that you want to try to beat or try to learn from, or whatever that metaphor is or objective. And again, yes, you can benchmark yourself against, if you're a full service hotel, against an upper mid scale, as long as you understand, you may not win because you have a lot more moving pieces than they do, right, and your revenue management can be more complex than theirs, by definition right. Same thing with benchmarking a runner. My age to a 19-year-old. I can learn, I can try to get faster, but I am not going to win that game. I'm pretty sure of that at this point.

Jeff Borman:

My good friend Matt from Cleveland Research recently shared that the tone for the remainder of the year really shifted. In June, Forecasts started coming down softer trajectory in the second half, softer leisure demand, downward pressure on prices. Are you seeing something different?

Isaac Collazo:

No, I'm not seeing anything different. I think the red flags went up with the first four months of the year Again April, probably March and April. We knew we're going to be different because of the shift in Easter right, so that wasn't, but January and February came in much weaker than we thought. Well, what's really interesting, though, is we anticipated that people would stay in the States more than they did last year, but that hasn't happened. Outbound travel still continues to see double digit growth. Lack of a better word.

Isaac Collazo:

The cream of the crop of leisure travelers are not staying domestically. We think that that's also. That's impacting like luxury to a certain degree, because you've seen luxury ADRs come down. Luxury is also probably being impacted by mixed shifts, and so we think that's a real thing as well. And then so that's the traveler that has the money is going elsewhere and doing things differently. The traveler that is struggling more because of the compounding impact or impacts of inflation, everything rising so much. We think they're totally shifting their behavior to different ways. I think they still want to travel. Everything we read is, and all the surveys say people want to travel, but we think they're actually leaving the industry and going to shared accommodations only because they can go with the family, friends and share that cost. It's almost, if you can say it, a soft landing for the industry, right? So kind of slowing and kind of soft landing as well.

Jeff Borman:

Well, I mean, I think, the soft landing. The last four years, I think every summertime armchair economist has been talking about the pending recession. I'm getting the sense that this year we will not be hearing that. I have not been.

Isaac Collazo:

I don't think we will. No, we won't. It's going to be again. I think there's still growth, but even I just saw the latest Oxford economics forecast that just came out on the 11th, and they've lowered their expectations for 2025 to 1.8%, and so we're about 2.3%. Well, I should have it right here. Yeah, we're at 2.3% growth this year, so it is slowing. There's no doubt it's slowing. There's lots of reasons for it. I don't think it's anything. No one expects a recession.

Isaac Collazo:

I was on the non-recession camp last year. I said there's not. I can see it. You know, to me, economics is not only the data I work with data, big data sets, all day but it's also observations, and so when I was back in 2008, when, before the Great Recession, you could feel it, you could see it among your friends In Alpharetta, where I live, it's a corporate compound, like everyone's in corporate.

Isaac Collazo:

There, we're all VPs and above right. Well, you could see. You heard people you know losing their jobs. You could see the stress and people going through harder times this time around, when people talk of recession, all I saw was my neighbors buying new cars. Right, I'm going. Well, I don't know what kind of recession this is, but BMW and Mercedes are doing pretty well, right, so it's just different. And then the houses are still selling in our neighborhood, which is up in Alpharetta, and you go wow, and they're selling for prices I would never have imagined when we bought there. So that's why I knew there's no recession. Is it going to slow? Of course it's going to slow. Interest rates alone are slowing everything, and I don't know about you, but every time my wife and I go out to eat, it's shocking.

Jeff Borman:

Now, I go. How did we spend that much for two burgers and a bottle of wine? Sticking with tourism economics, aaron Ryan presented about a month ago one of the scenarios in his outlook under key risk areas, and the very important words were here, because it's not a show on politics is a risk was a quote full-blown Trump presidency. And in the scenario that he describes as full-blown, that means that Trump returns to the White House. Republicans have total control of Congress.

Jeff Borman:

Us economy strengthens right away, stock market gains in anticipation of higher public spending. Inflation then starts to rise, trade wars are renewed, real incomes get squeezed, the Fed raises rates again and the economy starts to slow. Tariffs and saber-rattling lead to negative impacts in GDP and a tit for tat restricted tourism policies around the world, and we're right back where we started. Do you see a difference in you know at the time that would have been a Trump Biden comment in a Trump Harris presidency and the really specifically outlook on the travel industry presidency and the really specifically outlook on the travel industry, yeah, the way we see it right now, I do think what I'm in the camp of what Oxford is saying.

Isaac Collazo:

In tourism, yeah, because again, anything that restricts trade or rises prices is going to hurt us, right? And there's another piece that they've been talking about the immigration side. You know, whatever you believe in immigration, we need a policy. I think all of us agree. But you cannot stop immigration completely, right? Because there's a role for them as well, and part of their scenarios is that immigration really comes to a real halt. So then businesses, they just don't have the staff, so that's also a drag on the economy.

Isaac Collazo:

And we've seen that in the hotel industry. I mean, it's really simple how we're still having trouble with labor in the hotel industry. I mean it's really simple how we're still having trouble with labor in the hotel industry and can't fill jobs. With the Democrats did they win? There's already a playbook. We've already seen what's happened, right? So at least we already know it may not be explosive growth, but we don't see the anything that's going to slow down trade or put some you know some barriers to tourism at this point, and the barriers could be simple, as people don't agree with the Trump comes in. You know other countries don't agree with them or it could be a tit for tat, as he said in his commentary a few weeks ago.

Matt Brown:

Let's talk about bubbles for a minute, and one thing that's been living in that beautiful bubble over the last couple of years are extended stay hotels. Will extended stay keep going, or do you see the train running out of track in another year or two?

Isaac Collazo:

I don't know it's going to run out. It should actually gain a little bit more steam because of this, infrastructure bills and spending actually come to fruition. That should actually help. Extended stay, especially on the economy. Extended stay right, and so I still think they're a great product. I mean all of us that were involved with their development back from the Promise days, the Myriad days, the IHG days. They just give you the space and I do think people appreciate that. So I don't think they're going to run out of steam anytime soon and so there'll be some again. It's all depends on the market where you look. You know all the other variables that you will are aware of.

Matt Brown:

Everyone that's listening to this, so with office vacancy still climbing in unprecedented ways, is there a feeling that this bubble would ever burst for hotels Like? What would it look like for the hotel industry if we did kind of have a cratering of some kind?

Isaac Collazo:

I don't think. You know, matt, I don't see that happening, right. So what you said about offices is definitely true, right? So I just saw it. It's record high vacancy rates, right. But we also saw some better absorption in this month after declines. So you're seeing some movement in offices, hotels, I mean, there's still, I think, the desire to travel is still there and people, so they're still producing income and so people are still being to make their payments or debts on the, on the asset itself. So, yes is, there are areas we all know the areas where there are pain points at this point, but there are also very viable areas that will come back. I don't see them as nothing's forever. That's what I guess when I haven't been in the industry enough for 30 years. Nothing's forever. Things will change Again.

Isaac Collazo:

I just came from the South of France. I travel all the time in the US. It's just hotels seem to be doing well, but there's a lot of hotels right. The side that's not doing too well are the economy hotels which have been declining and that was I forgot to mention that one. The other question and they've been declining basically since 22. And a lot of it and a lot of them are having issues. But then you have to peel the onion back. You can't just say every economy hotel is going to, you know, can't make it. No, some of these hotels have been around 50, 60, 70 years there. They may have gone through their life cycle, right, and, given where some of these hotels were, their locations may have, you know, come and gone. So there's just a lot of it's just you really have to look at each asset individually and then determine what the right course of action would be. But I don't see it cratering, I just don't see that, yeah, I think the glass half full.

Jeff Borman:

Folk have long repeated that commercial real estate is insulated by the long-term leases right, and that there would be a slow decrease and bleed out, but maybe not the burst. But here we are probably halfway I don't know, I'm guessing halfway into a reckoning of commercial real estate. It hasn't blown up but it hasn't finished yet, clearly.

Jeff Borman:

Last, year at this time, rising insurance costs were, for probably the first time ever, at the forefront of a hospitality conversation. Has that settled? Is it still rising? What degree of increase have we seen since pandemic? Where has that gone? Where is it now?

Isaac Collazo:

It's still rising, but the rate of growth is slowing, but it's still rising. Right, it's just like inflation it's still there, it's just not as high as it was right, so you're still seeing, again, it's higher insurance costs, there's no doubt. In fact, I was looking at some articles ahead of this and, yeah, it's incredible and what we've seen in my own household how much some of our insurance has cost. Umbrellas and all that stuff are very expensive now if you can get them. So, yeah, it's still rising, but again, that rate of growth is slowing and it's going to take some time It'll slow. But also, I mean, the world is more I don't know the right word prone to use insurance. Right, because you're having a lot more catastrophes. However, you want to define catastrophes or a lot higher claims now because of the weather conditions, storms, whatever. So I think prices will continue to rise for a while.

Jeff Borman:

I think. Are you seeing the price rise only in aggregate, driven by places where you see hurricanes and fires, or is it rising so much there and only there, or is it also happening in? You know it's? In iowa, where things where the climate has not gone quite so crazy.

Isaac Collazo:

It's happening everywhere because the numbers I looked at were just national aggregate, so I would suspect some areas are seeing higher growth than others, but it's but on the national side. It was I was going to pull the numbers up, but it's still rising.

Matt Brown:

So it was I was going to pull the numbers up, but it's still rising. Isaac, in each pod episode you share a fun metaphor that illustrates the hotel industry at that moment. How did you come up with that great hook? And, if I may ask, what metaphor would you use to describe the first half of 2024?

Isaac Collazo:

We were joking around. I remember we were just playing around and I'm a big music buff. So, as you know, I go to music festivals all over the country and all of a sudden I can't remember which song it was, it was oh shoot, whatever it was the first time we did it and that's how it started. Whatever song was in my head and we couldn't get it out of my head at that point and I just said, well, it's like the industry. And then Stephanie and Jan laughed and made it to the podcast.

Isaac Collazo:

What would I describe the first half? To me, the word that I've been thinking about lately is like almost doldrums. But you know, you're kind of going in and out. You're not moving very fast. You're moving if you're moving, but it's not very fast. So doldrums is the word. I probably, and that's I think that's going to stick around for a while. You'll hear me say that because we've been using bifurcation, which is our big word this year. We had normalization the year before, so I think the upcoming word is going to be doldrum, and I also think it's weird because it can also be very volatile, and I don't know if you can have volatile doldrums. But I'm going to say our industry, because what I see week to week is volatility and what we said in the podcast we just released on Monday we did look at that volatility and it is not as volatile as 2019. It's weird because you look at it and you think, my God, this goes up and down, but when you look at the measures, you go, yeah, it's probably about the same.

Matt Brown:

It's actually not that bad. It's time for the mystery question. Isaac, you have delivered many presentations in your life. You have seen even more presentations. What is the one thing? If you were giving counsel to someone who was mounting a presentation for a hospitality audience? What's the one thing you would tell them to not do in their presentation?

Isaac Collazo:

Wow, that's a hard one Not do To me. It's not a not to do. Don't be too complicated, right, and try to you know, figure out how to land a man on the moon kind of idea where it's so complicated. What I find for my, when I'm presenting both to owners and executives, is you keep it simple and you keep it very. You still have your narrative, but each slide behind you is a very simple graphic. It's not complicated, it's very easy. They're there to listen to you, not to try to figure out the slide.

Isaac Collazo:

What I find when presentations go bad is the presenter is looking behind him or herself trying to explain the slide to themselves and to them because it's that complicated. And the one thing I would say never, ever, ever do in any presentation is say these words. I know you can't read that, but this is what it means. If you cannot see or read that on the slide and your audience can't, why do you have it? You're better off putting a white slide behind you and say here's something I want to tell you but I can't. You know I couldn't put it down on a slide, but I've seen so many people do that. I know you can't really see what this is telling you. Well then, why am I listening to you?

Matt Brown:

Excellent, isaac. Thank you so much. There it is everybody. Poetry in the numbers. We appreciate you being part of the show and keep doing everything that you're doing.

Isaac Collazo:

Yeah it's fun. I mean, I'm a kid that gets to go play in the candy store every day or the toy store I don't know what the metaphor is there but it's so much fun to have all this data you know, so it's great. So thanks, and always send me any questions you have or new ways to look at the data. I'm happy to entertain that.