Intro – 00:00:04: Welcome to the Hotel Moment podcast presented by Revinate, the podcast where we discuss how hotel technology shapes every moment of the hotelier’s experience. Tune in as we explore the cutting-edge technology transforming the hospitality industry and hear from experts and visionaries shaping the future of guest experiences. Whether you’re a hotelier or a tech enthusiast, you’re in the right place. Let’s dive in and discover how we can elevate the art of hospitality together.

Karen Stephens – 00:00:36: Hello, and welcome to the Hotel Moment Podcast. I’m your host, Karen Stephens, the Chief Marketing Officer of Revinate. And today we are honored to have Jan Freitag, the National Director of Hospitality Analytics at CoStar Group, joining us. Jan has over two decades of hospitality experience, particularly in the realm of market analytics and data benchmarking. Before CoStar, Jan played a pivotal role at STR, where he became a leading voice in hospitality data. His work has shaped how hotel owners and operators utilize data to optimize revenue, track performance, and predict trends. With his extensive background and expertise, Jan provides invaluable insights into the intersection of data and decision-making in hospitality. And he’s a podcaster himself. Co-hosting the Tell Me More podcast for Hotel News Now. So what I loved about this discussion, first of all, I have to say what an honor to have Jan on the program. I mentioned to him before we started recording that I felt like I had a rock star. So if you’ve been in hospitality for any length of time, you’re familiar with Jan and his work. Certainly, you are familiar with his data. So, really fascinating discussion. First of all, we hit on how much data CoStar actually pulls in, which is over 192 countries, in case you’re wondering. And in the United States, I believe, he has 83% of all the revenue running through the hotels are coming into their data analytics. So really fascinating to talk about the data set itself and then what they’re seeing. So Jan is going to give his predictions, so I don’t want to go too far into that. But I’ll just say that we talk a lot about unprecedented times. And for the hospitality industry, it sounds like it’s going to be precedented. So he’ll clarify what that means coming up. Last but not least, I think I just want to highlight when he talks about the bifurcation of luxury and ultra-luxury over the rest of the industry. It really comes down to the relative wealth, we’re seeing, in the population, which is great, and talks about how you really treat those customers when they show up on property. So I think you’ll really enjoy the discussion. And I give you Jan. Jan, welcome to the podcast. We are delighted to have you.

Jan Freitag – 00:02:40: Thanks for having me. Happy New Year.

Karen Stephens – 00:02:41: Thank you. Happy New Year to you as well. So I was telling some friends that I was so excited to have you on the podcast because we just released an episode where we had kind of our predictions for 2025 from some of our industry experts. And those were really interesting. But of course, everybody wants to know what’s going to happen to the ADRs and occupancy.

Jan Freitag – 00:03:01: I wouldn’t know what’s going to happen with ADR and occupancy.

Karen Stephens – 00:03:02: I know, I know, but I feel like you’re going to have one of the best guesses. But before we get into all of that, I want to start with a couple of questions just so our audience can get to know you a little bit better. So I know you’ve been in the industry for quite a while. So can you give us a little background? What got you interested in data and analytics and what you’re doing today?

Jan Freitag – 00:03:22: Yeah, so as you can tell from the accent, I’m from Germany originally. Did an apprenticeship there with the Mövenpick Swiss chain. So I cleaned the toilets and checked people in and out, and did all the property-level stuff. Then went to the hotel school at Cornell. And from there, they don’t really promote operations very much. They’re like, “No, you want to be a consultant.” So I ended up being a consultant with Ernst & Young. It just wasn’t really for me. And then helped a friend start a startup to compete with this company in Hendersonville, Tennessee. And he’s like, this is dot com 1998. The internet was just starting. “Come help me. We can take these guys.” We couldn’t, turns out. And then STR, which was the company we’re competing with, bought our small little startup in 2002. And I’ve been with STR ever since. So over 20 years. And then in 2019, CoStar, which is a large public traded CRE data company, purchased STR. And then pretty soon thereafter, they decided that they wanted somebody who speaks about hotel data, but talk to the CoStar clients, Blackstone, Greystone, BlackRock, GreyRock, all those PE funds and the bankers. And so I became the national director for hospitality analytics on the CoStar side. And I’ve been doing that since early 2020.

Karen Stephens – 00:04:37: Early 2020. Fantastic. And how much data? It’s been a while since I’ve seen the latest stats, but how much data does CoStar take into account for hotels when you’re doing your forecast? How many hotels overall? How many rooms, et cetera?

Jan Freitag – 00:04:48: So there are, whatever, five and a half million rooms in the US. And we know that 82% of all room revenue dollars go through our system. So we basically have complete coverage for all branded hotels in the US, and for all the high-end independent hotels. Because a lot of times the GM of a five-star independent property used to be a Four Seasons or a Resource and Regis person. So when they start their job, the first question is, “Oh, where’s my STAR report? It’s great. We’re not a subscriber.” They immediately become a subscriber. So we’re basically covered on the luxury end. And then if you go down the food chain, you end up with the Yan Inn with one and a half stars in the middle of Tennessee with 20 rooms. They’re not on anybody’s comp set. They don’t really have yield management. So we estimate their performance based on how brand properties around them are doing. And that’s a pretty good estimate. But we feel very comfortable that when we say the industry is doing X, that’s indeed what the industry is doing.

Karen Stephens – 00:05:52: That’s a very credible data set. That’s excellent. Okay, so, and you’ve seen a lot of shifts in the hospitality landscape over the years. So how have your data-driven approaches to revenue management evolved since you first began your career in this space?

Jan Freitag – 00:06:06: Yeah, so Randy Smith started STR by asking for three numbers and making three numbers, right? We asked for supply, demand, and revenue by property by month, and then we made occupancy, ADR, and REF PARP by month. And that was literally the origin of this business, this global ed business. Right before 9/11 in the year 2000, we switched to daily. And that then really helped in post-9/11, especially in 2002, people wanted to know what was going on every week. So we could provide that. But then pretty soon thereafter, because we’re also having a representative on the Unisystem of Accounts for the lodging industry, USALI, right? There’s an STR representative there. And so we got pretty quickly requests for, “Hey, can you also track F&B? Can you track SPA? Can you track profits, most importantly?” And so then we started to get into P&L benchmarking as well. So we’re now basically taking everything as we can. So it’s daily data. We normally push it out on a weekly basis. As you know, the data comes to us on Monday and we push it out on Wednesday with the Star report. We ask for group versus transient data, group rooms being solved in increments of 10 or more transient between 1 and 9. That’s super interesting, for our larger clients, for the upper upscale luxury type clients. And then we have the P&L data, and we have all of this globally. So this is not just a US shop anymore. We expanded into Europe through the acquisition of Hotel Benchmark and Benchmark Analytics. And then, well, now we’re global. We can do this for any company, for any market. I think we cover, I had this stat the other day, so the UN covers, I think, 212 countries. And we have data in 192 countries.

Karen Stephens – 00:07:55: Wow, that’s phenomenal. So that is a lot of data. And before we get into the forecast, do you ever encounter overwhelm with hoteliers? I wonder if I’m the average hotelier, and I’m trying to process all this data, how would you recommend handling the overwhelm? What are your recommendations?

Jan Freitag – 00:08:12: So one of my big talking points when we talk about the data — there’s interesting, and then there’s actionable. Hopefully what I do is interesting, but I talk about the total US data. I say the occupancy, whatever the ADR next year will grow 1.7%. Is that interesting? Hopefully. Is it actionable? Not really, right? Because people are like, “Wow, but what about New York City? And what about Brooklyn? And what about my hotel in Brooklyn, in New York City, in the United States?” So I’m talking very, very high level. So I think as a hotelier, you have to separate interesting from actionable because a lot of stuff that comes at you, you’re like, “Oh, that’s kind of interesting”, but it doesn’t really help you move the needle, and it doesn’t really help you to make more money. So I think that would be my first lens when I get sort of this data overload. “Does it help me as a hotelier make more money?”

Karen Stephens – 00:09:03: Great. All right. Let’s get to it. How are we looking, Jan? How’s the forecast for 2025, or at least the near-term forecast? What are we seeing?

Jan Freitag – 00:09:11: So we are recording this right around the ALIS Hotel Investment Conference in LA. And Amanda from STR is going to put the STR forecast out, the CoStar forecast out. So we’re proposing that RevPAR is going to grow 1.8% this year. Last year, we’re probably going to finalize the year at around 1.7% or so. And the ADR growth is going to make up the majority of the growth for this year. So call that 1.6%, 1.7% or so. That makes up the 1.8%, 1.9% RevPAR growth. So basically, slow and steady, basically what we’ve seen before. I think sort of the headline that I saw for the hotel industry, but I was related in real estate, but I thought it was very fitting for the hotel industry is, may you live in precedented times? So the precedent here is 2024. We saw bifurcation, the upper end of the market doing much better than the lower end of the market. We saw international outbound, very strong, American second-hand dollars abroad, international inbound being so-so. We saw the pipeline not growing very much. And that’s basically the talking points for 2025 as well.

Karen Stephens – 00:10:26: Okay, so we’re just hoping for a continuation of what we saw before, which is all good. Well, yeah, it’s going up. So that’s good.

Jan Freitag – 00:10:34: I mean, I think it’s good. You know, it’s not great, but it’s not terrible. Now, the asterisk to all of this is we have a new administration coming in that has a lot of topics. And so it’s going to be super interesting to see how that impacts our forecast going forward our first six months or so. When we get together at the NYU Hotel Investment Conference, we’ll have a couple of months under our belt, and then we’ll see if we’re adjusting our forecast going forward.

Karen Stephens – 00:10:58: Okay. So you just mentioned some bifurcation with the upper end of the market and the lower end. So why do you think that the luxury and ultra-luxury is outperforming so well? What is causing that differentiation?

Jan Freitag – 00:11:10: Yeah, so the two-word answer is, “wealth effect.” So this is the term that economists use to sort of describe when people are invested in stocks, when they have a 401(k), when they own their own house, and they look at those lines of the value of what the stock market is doing, what the home price Case-Shiller index is doing, what your home is worth on homes.com, which is Costar company. All of those lines are looking up, and that makes you feel wealthier. And the unemployment rate is really low. So you’re like, “Look, I’m pretty good in my stock market. I’m pretty good in my house. I feel pretty good in my job. And even if I will let go of there, I have a very high likelihood I’m going to get a new job. So you know what? Let me just go out and splurge a little bit.” I think in 2020, right afterwards, we got — everybody got a Peloton, right? You got a Peloton. I got a Peloton. Everybody got stuff. And then pretty quickly, we switched to experiences. And that hasn’t really changed. I think COVID and the travel bans and the travel restrictions are still sort of in our mind, in the back of our minds. And this idea is like, “Oh, I couldn’t do it. Well, that’s not going to happen to me again. I really want to do it.” So we’re going to continue to see the American leisure traveler wanting to go broader, stay in the United States, but then also to treat themselves. And I think the Wall Street Journal was kind enough to pick up our data about the thousands, the $1,000 ADR hotels and the rise in the $1,000 ADR hotels. That in 2019, we had 150 or so hotels globally that had an ADR, not just one night, but an ADR of $1,000. And 2024, it was 450 hotels. So a lot more hotels charging a lot more money. Why is that? Well, because the upper end is doing so much better.

Karen Stephens – 00:13:05: The demand is there. Wow, that’s fascinating. So we talk a lot about experiential travel. So I have a lot of guests on the show who work for really nice high-end brands, and they talk a lot about how experiential is what it’s all about. Can you talk a little bit about how you see that shift impacting revenue management? How should people be thinking not only about the room rate, but everything that’s happening once that guest gets on property? How do we think about that?

Jan Freitag – 00:13:29: Yeah, so I have two answers to that. One is math. The math and the experience. So we will continue to publish luxury room rate ADRs that will grow, but they will not grow as quickly or they could actually decline in certain markets. Why is that? I just said that there is very strong leisure demand. It’s because we’re changing the makeup of the luxury traveler, which used to be 100% leisure. But we are now seeing the resurgence of the small incentive groups or maybe even the larger incentive groups of the sales trips. You have to motivate your people. They’re not all in the office together. But how do you get them to be a cohesive unit? You have to treat them well. And that’s where luxury and high-end resort hotels are coming into saying, “Hey, we’re at the ready.” You come to US for a destination for an off-site for sales training for a product launch. And you treat your customers and your staff really, really well. But what that does is because obviously it’s group demand, that ADR is lower than your leisure, basically bar rate. And so our data, and this is the math part, will just show that growth rates are not quite as strong or maybe even decelerating from what we have. That’s not a bad thing. We’re just changing our customer mix from 100% leisure to leisure plus corporate plus group. So that’s that part on the ADR side. But to answer your second part, it’s absolutely critical to understand what’s the total spend. And we’ve talked about total lifetime value of a customer, but I think there’s a total stay value of a customer, right? Yes, they pay for the room, but then what else can we offer them? “Oh, I don’t want to go outside. Let me just eat right here.” Or yes, the spa is very, very attractive. Or there are other amenities that I can book even before my stay starts — that we can monetize? So that becomes more, and more, and more, important on the upper end. The very fine line there, though, is to not nickel and dime a customer who’s paying $1,200, and then you charge them $8 for a Snickers bar in the mini bar. Like you can’t do that. I’ve had a lot of really, really interesting experiences where I come to a very, very high and I’m not paying for it. I’m being asked to speak there. But now the mini bar is free. And they’re just like, look. Here’s a bunch of Snickers bars and a bunch of Cokes. There’s no alcohol in it. And I’m just like, “Oh my God, I feel so valued. I get a free whatever, you know, Coca-Cola. Because I know that an other hotel costs $6 or so.” So I think there’s something that revenue managers together with marketing people need to figure out. Where is the customer going to pay additional? What can we just throw in to create the value equation?

Karen Stephens – 00:16:23: Absolutely. You know, we’re seeing a big shift in loyalty programs as well. One that comes to mind is Pacific Hospitality Group, where they have a loyalty program where if you’re a member, the minute you get on property, upgrades are available to you. There’s food and beverage credits. There’s a lot of things that happen with booking that room rate directly. And to your point, these are very nice, beautiful, high-end hotels. So it’s an expensive trip, but there’s a lot of value in that trip. And you feel like a rock star the minute you show up. It resonates with me what you’re saying about that echelon of travel that feels like, “I really deserve this.” So you get that experience, but you’re also being surprised and delighted the entire time.

Jan Freitag – 00:17:01: But you mentioned an interesting word there, book direct. I think that is critical for the hotel. Say, “No, I don’t want you to come from any other channel. I want you to come to me directly. And then I’m willing to sort of value that loyalty.”

Karen Stephens – 00:17:16: Absolutely. They value the loyalty. They get all the preferences and personalization up front. And then, of course, going back to math for the hotel. It’s better for revenue management, for profitability, and all the rest. So that is fascinating. So one thing you mentioned at the top of the call was how STR started to change forecasting because of 9/11. I’m really curious. I know other conversations we’ve had on this show post-COVID is just everything that you thought you could predict kind of goes out the window. We’ve had so many weird years since there. So can you just talk at a high level of how you think about that now that we’re in this kind of post-COVID era?

Jan Freitag – 00:17:54: Yeah. So I think we were all a little surprised at the vehemence of the traveler of this revenge travel idea that started out of China. And then sort of once people were able to travel again, everybody wanted to travel. I think that had huge implications for room demand and for room rates. Is that sustainable? Probably not as for a country or for a world. I think that is going to normalize. We were very interested to see that people aren’t in the office and that a lot of companies felt like, “Oh, we’re still pretty productive. We don’t have to be back in the office.” So there’s a lot of pain on the office commercial real estate sector. The implication is if people aren’t in the office, how do you still build culture and values? Well, you have to have small group meetings. And when you follow the earnings calls for Hilton and Marriott, they specifically call out small group meetings. And I would argue those were meetings that didn’t exist in 2018 and 19 because we had a water cooler, right? We were all in the office all the time and we are not any, to a large extent. So a lot of companies are now saying, “Well, let’s have these additional group meetings that didn’t exist. The counter to that is because we’re not in the office all the time, we’ve definitely seen Monday night, Thursday nights are really tough for corporate transient demand because it’s like, “Well, if you’re not in the office, on Friday or on Thursday, I’m not going to fly to Minneapolis or Chicago to meet with you. We’re just going to do this over Teams and over Zoom.” So there is this interesting teeter-totter, this interesting balance that we actually haven’t met yet where there’s still more room to go. I think we will see more companies coming back to the office, but I do wonder if that corporate, “Hey, New York City to San Francisco overnight just for dinner trip that we did in 2017.” It’s probably not going to happen again because this is just so much more established now. International travel, super interesting question because the dollar is so strong that the Americans are going abroad. But that means then that New York, and Las Vegas, and San Francisco are so expensive for the European or the Asian travelers. And that then means that, “Oh, we’re going to continue to see international outbound dominate, and international inbound really is going to be a tough slog for marketing people to say, Oh, please, please, please come to Florida, come to Texas” — what have you. So those are a couple of the themes that came out of COVID. Oh, and I should mention, of course, the new supply has really not been a big deal. With the ramp up in inflation, interest rates were high and are continuing to be arguably higher for longer. Who knows where they’re going to end up? But it makes new construction really, really hard. Very, very expensive. And so last year, supply growth nationally 0.5%. The long run average is 1.7%. We’re going to get back to that one day eventually, maybe, but we’re not seeing it last year, this year, and maybe even not next year. So new supply is a very different conversation now than it was pre-COVID. So those are kind of the high-level themes, the learnings that came out of COVID for us.

Karen Stephens – 00:21:24: Yeah, so that’s very interesting how the shifts that we’ve seen. I think that that’s exactly bang on from your corporate traveler, that coming, pulling back. Now group is coming back. And as we’re talking, I’m thinking about my own company, and we are a remote first. I mean, after COVID, we spread to the four winds. We certainly have office locations, but we’re all over the country, all over the world. And we’re doing a huge sales kickoff, you know, at a beautiful hotel here in about three weeks. That’s a very nice four or five star hotel. So all of this is really resonating with me because I think people still want to get together. Oh, and I’m about to go on vacation to a very nice hotel. So I’m like, Jan, you are bang on.

Jan Freitag – 00:22:03: But you’ve got to get people together, right, for that sales kickoff, for that annual kickoff, just to say, “Hey, are we all aligned? Here’s the marching direction. Then, yes, you know, go work remote.” But you’ve got to get together so that we all can then in lockstep move forward.

Karen Stephens – 00:22:19: 100%. There is no replacement for that, no matter how many video calls you’re on, being able to get together. So good news for hotels. I only see that continuing. So that’s great. So a couple of finishing questions here for you, Jan. So throughout your career, you’ve been at the forefront of hospitality analytics. What’s one personal achievement or moment that stands out to you the most in your journey?

Jan Freitag – 00:22:42: So I have been fortunate to be part of a few groups. I’m part of the Urban Land Institute, Hotel Development Council. I’m part of the AHLA and Hotel Investment Roundtable. But specifically for you, I am a member of the local chapter here, and they have a mentorship program. And that’s just been super fun to get somebody who’s two years out of college, or maybe five years out of college, but then career transitioning, and meeting with them every three weeks or every four weeks to just say, “Okay, so what do you want to do? How can I help you? Now, what kind of questions can I answer? What are the questions that you have that me, based on mistakes I’ve made or experiences I’ve had, to say, Hey, maybe this is one way you could handle tough conversations with superiors, or just mapping out what my next two career steps should be?” So mentoring in that space has just been super interesting and very, very fulfilling.

Karen Stephens – 00:23:35: Oh, I love that. Mentorship — one of my favorite things to talk about. And hospitality is such a great industry. And I think it’s cool. Someone like you who started in hotels and then was able to transition into this job over time, have your career shift to being able to inform the industry, but still get to participate in all the goodness of it. And then mentor people is really cool. All right. So to wrap up as a thought leader in this space, what’s one piece of advice you would give hotel owners and operators looking to leverage more data effectively in 2025?

Jan Freitag – 00:24:07: Yeah, so number one, buy more data. Very important.

Karen Stephens -00:24:17: CoStar.

Jan Freitag – 00:24:19: I think I mentioned earlier the difference between interesting and actionable. I think there is a lot of value in the upcoming AI tools. And I would not propose that these are taking anybody’s job of the people who are listening. But Google uses something, this term, Copilot. And I’ve always liked that a lot. Because this is not the person who does your job. This is just somebody you can ask questions of. Now, if your company is big enough, you may be able to have your own AI sandbox where you can put your own data into it and then ask very specific questions. You don’t want to put your data out into the world in AI being trained of it. But if you’re able to use a sandbox just to say, “Hey, what are the trends? Show me the exception. Don’t show me what the normal is. Show me where do I need to really focus on.” So interesting versus actionable. And then the exceptions that get flagged either by AI or by your own internal systems. I think those are the two things how I would sort of work with all the data that’s coming my way.

Karen Stephens – 00:25:22: Awesome. That’s great advice. Well, thank you, Jan. I really appreciate your time today and looking forward to a wonderful 2025. Thank you.

Jan Freitag – 00:25:30: Thank you very much for having me. Have a good 2025.

Outro – 00:25:36: Thank you for joining us on this episode of Hotel Moment by Revinate. Our community of hoteliers is growing every week, and each guest we speak to is tackling industry challenges with the innovation and flexibility that our industry demands. If you enjoyed today’s episode, don’t forget to subscribe, rate, and leave a review. And if you’re listening on YouTube, please like the video and subscribe for more content. For more information, head to revinate.com/hotelmomentpodcast. Until next time, keep innovating.