By Robert A. Nozar H&MM Editor-in-Chief

May 1998 - Randy Smith didn't bother trying to hide his moistened eyes as he spoke to the 1,500 attendees at the 1997 UCLA Extension Hotel Industry Investment Conference. He had just become the surprise recipient of  the Pioneer Award, presented by the International Society of Hospitality Consultants, and was clearly touched by
the honor.

The Pioneer Award is given to an organization or individual that has advanced or improved the hospitality industry by virtue of an outstanding contribution or achievement, and few in the U.S. hotel industry would disagree with the fact that for the past 11 years, Smith has contributed in an immense way to the industry's improvement.

It was in June 1987, that Smith got off a jet at San Francisco International Airport on his way to attending that year's American Hotel & Motel Assn. convention. He had recently departed his position of director of research at Laventhol & Horwath, where he worked for nearly 10 years. He was now embarking on a new career, as the owner of his own company-Smith Travel Research. Had the airline known what an important event this was going to be for a man launching a new business, it might have taken extra care in seeing to it that his luggage arrived in the City by the Bay when Smith did. Unfortunately, that was not the case, so Smith showed up for the event's opening reception in a golf shirt and jeans. Not exactly the wardrobe of choice for a person wanting to
create a strong first impression of his new company.

But what Smith had to offer the industry outweighed his casual appearance, and since that time there have been few bumps along the way as Smith has established one of the most important companies in all of U.S. industry.
"The original purpose was to track market share chain-to-chain and properties- to-properties," Smith said. "Now it's taken on a much more strategic role involving operations, development, mergers and acquisitions [and everything else] involving the lodging industry."

Smith's tears told the story of a man who believed in a service he offered and who was able to convince an industry that for the large part has come to view Smith Travel Research as an indispensable part of the lodging spectrum. His is a success story built of need.

Each month STR obtains data from more than 15,000 properties accounting for 2.1 million guestrooms. The company tracks market share performance for all the top chains, with the exception of Super 8, and most major management companies through its STAR program. The original idea, however, was much different.

"My wife and I thought we could sell the data to suppliers," Smith said. "We soon discovered that was not enough of a market." Smith went to work in 1976 for L&H, and his employment involved working with numbers. He said the need in the hotel industry for competitive information really hit in the mid 1980s, which is when he created the STAR Report.
 
 

Growing up in Memphis, Smith became acutely aware of a local company called Holiday Inn. He read a lot about Holiday and in the process became familiar with the hotel industry. It was Holiday he approached first in an attempt to capture a client for his new business, and Smith succeeded. With that victory in hand, Smith wrote to all the other hotel companies.

"We got no response; what a crushing blow," Smith said. So he called Hilton and told them about his success in getting Holiday on board. They politely listened and told him to come back once he convinced
Sheraton of the need for his services.

"At that point, I couldn't even afford to fly to Boston, so I took a train," Smith said. "In five minutes, I had a contract signed. By the end of '86 we had 15 chains." Now STR is a company that-speaking philosophically-helps the industry avoid excesses.

"We act as a governor," Smith said. "The excesses are frustrating. It's caused by a lack of attention to what the customer is looking for. The goal seems to be meeting corporate objectives rather than meeting customer demands." Smith has praise for the innovations, calling them tremendous and creative, but he said the industry needs to deal with the difficult job of getting rid of old things that don't work. He said there is too much tradition that gets in the way of real progress, and is concerned about the lack of corporate support for the lodging operation.

More attention needs to be directed, Smith said, toward what he describes as the topsy-turvy relationship between franchisors and franchisees. He said there needs to be a lot more cooperative efforts on both sides.
"I liked it when the franchisors ran their own hotels," Smith said. "It gave them an understanding of the operations side. Now we have moved away from that and there's not a very good understanding at all."

For the hotel industry to sustain its current rate of success and make sure growth in supply does not start to outstrip growth in demand, Smith said the urgent need is finding more customers, but not at government expense. "I'm adamantly opposed to the U.S. government marketing our industry overseas," he said. "We have to contribute to stopping government growth and we can do that by marketing ourselves."

Extended-stay is another area of concern for Smith, who said that while the industry has definitely hit on an underserved segment of the market, he has heard what he calls ludicrous numbers on the demand side. "Too many companies [in all segments and niches] are not concerned with actual performance," he said. "They just want to get the properties built and not all of them are being built where they are actually needed.

"The problem is a developer has trouble bringing a hotel into a market where it's needed, but few problems in markets where they're not needed," he added. More realism is needed, Smith said, as the industry tries to deal with its labor shortage. Not all jobs lead to a job as general manager.

"In dealing with lower-level employees, we have faced problems because a lot of those jobs really don't have a future," Smith said. "This industry offers a lot of starting positions and that is vital to the nation's economy. We are kidding ourselves and are sometimes dishonest with workers if we lead them to believe they are on a [career path]. We need people who will sit there and do their jobs. It's unfortunate, but that's the way it is."

At STR, there are now 30 employees where not long ago there were only two. The company goes through 25 cases of paper in three days as it prepares customized reports for all its clients, basically showing how those clients are doing vs. the competition. Cendant Corp., for instance, gets two cases of paper and a stack of diskettes every month. With all that work, Smith is basically holding up a mirror for the industry to see its own reflection.

"Our role is to report, not drive the industry," he said. "We're merely the messenger."

Part of what Smith has taken on in the role he created is answering the many calls he gets for personal appearances, a task he divides with Mark Lomanno and Chuck Ross of his staff. As a general rule, Smith does not like public speaking, particularly to large audiences, but he handles it as a function of his role.

Is he still having fun? "Yes, I am having fun, but that's a question that's not as easy to answer in the affirmative as it used to be," Smith said. "With the influence of Wall Street and other changes, we are sometimes put into an uncomfortable position and we don't like that role. Saying something about the industry and causing a stock's price to decline is not fun. We don't like costing our customer money on the stock price."

Smith calls lodging a clean industry with upbeat people, and he doesn't mind being one of its advocates. "I like being a part of it, it's an exciting area," Smith said. "What we should remember in order to not fall into traps of the past is what's good for a company is not always what is good for an entire industry."