Brands & segments
Chain scale
Chain scale is STR's classification system that groups hotel brands into six distinct tiers based on their actual average daily rate (ADR) across the portfolio: Luxury, Upper Upscale, Upscale, Upper Midscale, Midscale, and Economy (plus Independent).
How it is used
Operators and investors use chain scale to establish benchmark competitive sets, evaluate brand affiliation performance, and justify development costs. Feasibility studies rely on chain scale groupings to project realistic ADR, occupancy, and cap rates for prospective properties. Revenue managers analyze market share against direct chain scale peers rather than mismatched local competitors, ensuring accurate RevPAR Index calculations. Asset managers also track chain scale shifts to determine when a property requires capital expenditure to maintain its brand tier or reposition into a higher bracket.
Worked example
A developer evaluating a site compares two brand options: an Upper Upscale soft brand averaging $240 ADR at 72% occupancy ($172.80 RevPAR) versus an Upscale brand averaging $160 ADR at 78% occupancy ($124.80 RevPAR). The $48 RevPAR premium helps calculate whether the higher construction standards required for Upper Upscale yield a sufficient return on investment.
Common mistake
Chain scale classifications are assigned at the brand level based on global ADR, meaning an individual property may underperform or outperform the average rate of its assigned tier.