Methodology

Rates

We shop prevaling rates, not the hotel's published or desired rack rate. If they advertise their rooms at $149, but there are too many ways to get one for $119, we're going to put it down as $119. (With some of these properties, their rates are all over the board, and you have to pick one close to the middle and guess.) If some OTA (or even TripAdvisor itself) is advertising it at $109, but nearly all of the other rates for that hotel are at $139, you're probably seeing a promotion with a discount, so we peg it at $139.

When we do the shop, we do it for a Monday and Tuesday night, two to four weeks ahead. If we can't get a rate for that specific night off TripAdvisor, we'll look up an average rate on Google, but we're not going to do more than one or two mouseclicks doing that. It's too much work, for too little possibility that they'll actually have a room, or that the rate we find will be accurate. We'll simply peg it for the date of that Index as "No online availability".

About market tiers

The important part to remember about hotel market tiers the way that we describe them, if you don't want to know that much about it, is that we didn't make it as a hotel rating system to compete with Michelin and AAA because we thought our tastes were superior and we could do a better job of rating hotels. It actually has multiple business, design, property development, and marketing uses.

For just one example . . . very little competition between hotels occurs across market tiers, and the day that that ever changes will conclude with the evening that Mitt and Ann Romney check into a Motel 6 because it's silly to spend the extra money to stay at the J. W. Marriott (or even a Courtyard by Marriott).

The Hampton Inn doesn't worry about competition from the Days Inn. It might, but it needn't. A Comfort Suites in good condition needn't concern itself too much about competition from a Super 8 Motel. If a guest walks into a Wingate Inn and it's full, he's much more likely to fall back on a Comfort Suites - a more comparable property, with a brand owned by a competing franchise organization - than he is to 'rough it' for a night at the Super 8 or a Days Inn, even though the three Wyndham brands use the same Rewards card. A good Holiday Inn Express may worry just a little about competition from a Hilton Garden Inn, but a LaQuinta Inn, Days Inn and Super 8 needn't worry about it at all. One of the reasons why is that within each market tier, the sets of reasons why one would choose a particular hotel change.

• At the economy tier, price is paramount. That $59.99, more or less (and if you check into a hotel or motel that charges much less, you're inviting an unpleasant encounter with housekeeping, maintenance or security problems: it costs most hotels nearly that much per room to cover their costs and maintain their property properly) is all the money the guest is willing to spend, and then, they look at other factors: security (in an economy property, that matters), location, and 'nice' (as not showing too much wear, tear and accumulated grime). At that tier, it's all about cheap (subject, of course, to minimal housekeeping, maintenance and safety standards).

• At the Class B mid-market tier, price is still very much a factor, but value becomes a consideration as well. The guest wants to see a better breakfast, although he'll occasionally have to suffer along with something more plain: if the breakfast is something he can accept, he'll be happy at that hotel. She doesn't want to see security problems, although from time to time she might see people or things that look kind of scary: as long as she's okay that she's safe, the hotel's a bargain. The room must be clean, although it might not always appear to be that way. It must be up to date, with the carpet not too old, although in some places that depends on how you define 'old'. At that tier, it's all about compromise: a guest might accept or not notice a weakness in one or two of those - or other - areas that are of not as much concern to himself or herself, but wants the hotel to get the areas that are important to him or her right. As long as he's found a hotel at that level that works in the areas that matter to him, he's happy to pay the $79.00 per night (and will frequently try to haggle that rate, demand their AAA, etc.) and save the extra fifty bucks he'd pay at a Holiday Inn Express or a Wingate.

• At the Class A mid-market tier, the guest pretty much counts upon paying $129 per night, more or less -- but no compromising: at that tier, it's all about near-perfect and up to expectations. Everything has to be consistent and work perfectly, and there's little tolerance for neglect of the property or sloppy operation. You just don't see dirt, things that are broken (or even worn), or security problems. Individual hotel and brand attributes make some difference at this level, but these are secondary.

• At the upscale select service and any higher tiers, the rooms themselves are somewhat more plush, but not that much better in themselves, and what the guest is paying the extra money for is the added amenities and services each hotel offers - or at least access to them, even if he or she doesn't use all of them.

• We kept tweaking our charts over the years as it becomes necessary to make an adjustment. For example, we had Comfort Inn as a Class A brand, starting out. Choice has let them run to crap to the point where we now have them as a Class B. When we started this classification system some five years ago, we had Days Inn as a Class B brand, but we've downgraded it to economy.

• We've laid out two new market tiers. Where you see both Class A and Class A2 (this shows up on our Beerware Index), Class A includes strictly Marriott, Hilton and IHG brands - Fairfield, Hampton Inn, and Holiday Inn Express - while other Class A brands are designated A2. These Class A2 brands -- Best Western, Comfort Suites, Country Inn and Suites by Radisson, Wingate by Wyndham -- are not as aggressively supported by their franchise organizations or as tightly controlled, and it shows up in the rate they are able to get even though a good one will generally show up for the guest as just as good a quality as a Hampton or an Express.

• We didn't bother with this on the Beerware Index (we wanted it to fit on one page), but on some of our charts if you go looking for them, we have the Class B Sleep Inn and Microtel categorized separately as Class B1: both are new-build brands. But each was originally developed in the late 1980's as an economy brand, they still used the same property design with the smaller rooms (unlike Fairfield by Marriott, developed as an economy brand at the same time, they never did quite make the transition to Class A); and since Class B is all about compromise, that's where they're both stuck. Each is capable of better. In the hands of the right owner, it can and frequently does happen. Sleep Inn has better product consistency than Comfort Inn. But each has the wrong kind of franchise organization, and the wrong brand standards, to make it happen consistently.

• On the Beerware Index, we identified some of the brands that lie within each market tier in the small print in the column for each market tier. With others (you'd notice on some of our older charts that some brands are so lacking either in number of locations or product consistency as to defy classification), and with independent properties, we have to kind of guess. Our experience is select service: anything above a Courtyard or a Hilton Garden Inn is above our oxygen level, and we made no effort to distinguish between upper-upscale, upper-upper-upscale, and the various luxury tiers. Except for big-box Marriotts and Hiltons, most of these, even the ones that are operated as part of a chain, are one of a kind anyway. Unless it's pretty clear that a more modestly priced independent property is operated as an economy property, we usually put it down as Class B. We acknowledge that some may deserve better, but with a property we've never visited personally, it's the best we know how to do.

• We don't include any property - whether Class B, economy, or extended stay low - that has a TripAdvisor bubble score of less than 3.0. Most towns have several - and every town of any size has at least one - voodoo hellhole that rents mostly to local people, offers rates as low as $42.00, and you end up sharing with the crackwhores and the cockroaches; but if you're buying an economy property is some town, is that what you're hoping to run? You're a decent person, you're not going to compete with that.
  

  If we owned a franchise organization, and your TripAdvisor score got even that low, we'd kick you and your shitbox property out of the system. Choice and Wyndham have oodles of them because they're not in the hotel business, they're in the franchising business. The difference shows up very badly in how they operate and what they let their franchised properties get away with but hey, whatever keeps the fees and royalties rolling in.

Submarkets

If you want to build or buy a property in, say, Nashville; then what part of town you put it in can make a big difference in what kind of rate you can hope to get, and what kind of return on your investment that you can expect.

We look at the specific location within a town that we have in mind. Just being in one part of town or another can make quite a difference even in a smaller city. So, you want to sort out your existing hotels in a city by the individual submarkets within that city in which they are located.

HVS divides most larger cities into recognized submarkets, but you can identify them yourself (adequately, if not altogether accurately by HVS's methodology) by bringing up a city in which you're considering a new hotel on Google Maps, searching 'hotels', and noticing in what areas of town that the little red symbols that represent the hotels that come up seem to be clustered on that map. A few isolated properties will occur, but each of these clusters indicates the presence of a separate submarket.

Each of these submarkets will have different demand generators: if you're traveling to Charlotte to do business near South Park, you don't drive across town to check into one of the hotels near the University. Hotels usually tend to be clustered near the largest demand generators, or the largest concentrations of demand generators, in a town. (Even smaller towns the size of Wilson, North Carolina or Parkersburg, West Virginia can be sorted into 'hotels in town' and 'hotels out near the interstate'.)

Some, but not much, competition occurs between hotels across submarkets in a city. The rates at hotels in different parts of town will reflect this. Room rates are a function of supply and demand. I can get into the idea of putting a new hotel in Raleigh, but the very next question is going to be, where in Raleigh? It makes a difference. People are going to stay as close as possible to the demand generator that drew them to that town: they're not going to want to drive across town from their hotel to it without some reason.