CoStar Spending $450M To Buy Hotel Research Firm STR
The acquisition marks a move by CoStar into the hotel sector, where it hasn't previously been a major player, though it does currently provide basic building information on 80,000 hotels, 45,000 hotel sale comparables and 4,500 hotels offered for sale.
STR, founded as Smith Travel Research in 1985 and headquartered in suburban Nashville, provides data analytics, performance benchmarking and market information on the hotel industry, aggregating data from over 65,000 hotels worldwide, representing nearly 9 million rooms in over 180 countries.
Among other things, STR’s information provides anonymized information on occupancy rates, average room rates and revenue per available room. The company’s flagship product, the STARreport, provides hotel brands, owners and management companies performance benchmark information, with more than 1.2 million reports distributed each month.
The Smith family still owns the business, The Wall Street Journal reports, and will cash out 34 years after founding it.
CoStar has expanded considerably thorough acquisitions, making about 30 in its more than three decades of existence, including its biggest, LoopNet and Apartments.com. Just this summer, the company acquired Off Campus Partners, an online multifamily marketplace service for student housing.
CoStar will pay nearly a half-billion dollars for STR to complement its existing offerings and allow it to offer new services to investors and service providers in the hospitality industry. In that way, CoStar compared bringing STR into the fold to its acquisition of Apartments.com, which enabled CoStar to extend new services to the multifamily real estate industry.
"Acquisitions have been very important," CoStar CEO Andy Florance told Bisnow in a July interview. "A lot of these acquisitions we've made, we've acquired them and used them as a catalyst to launch new products."
CoStar has also recently been changing the way it approaches its research and sales efforts. One example is that the company is moving away from offering free exposure on Apartments.com. Instead, it is ramping up advertisement sales efforts on the site, with rates as high as $7,500/month for the best placements.
Florance said this summer his company began primarily as a source for information on properties at a time when that information was hard to find. But now that such information is more widely available, he said CoStar's advantage is its marketing distribution channel, which offers advertisers the ability to reach millions of industry participants.