What is TRevPAR?

Let’s begin with a simple TRevPAR definition. The acronym TRevPAR stands for Total Revenue per Available Room. TRevPAR is a metric that offers a more meaningful look at the profitability of your hotel, calculated by dividing total revenue by the total number of available rooms.

If there’s one constant in the hotel industry, it’s the thought that owners and managers put into the revenue management of their business. Is my TRevPAR where it should be? Are we recording it correctly? How can we increase it? Should we focus on TRevPAR? 

This blog will give you a full rundown on TRevPAR and how to use it.

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What’s the difference between TRevPAR vs RevPAR?

TRevPAR is a metric designed to give hoteliers and other accommodation providers a sense of how efficiently and effectively their hotel is generating revenue. It is based on a similar but simpler metric, RevPAR – the same acronym, just with ‘Total’ dropped from the front.

Where RevPAR looks purely at room rate revenue, TRevPAR includes all the other forms of revenue that a hotel might generate, including from room service, the bar, the restaurant, airport pickups, day spas and more.

In this way, TRevPAR can give you a truer sense of how much money your hotel is making on each room. TRevPAR is a particularly valuable metric for accommodation providers who offer plenty of add-on services, as room rates will only ever tell part of their financial story.

What is the formula for TRrevPAR?

The TRevPAR formula is surprisingly simple – you just calculate your total revenue from any given period of time (a day, a month, a year) then divide that revenue by the total amount of rooms that were available over that span (whether occupied or not).

Total revenue / total available rooms = TRevPAR

How do you calculate TRevPAR?

To understand how to find your number, let’s take a look at an example TRevPAR calculation.

Let’s say your hotel has 20 available rooms on a given day, and brought in total revenues of $4000 on that day. Your TRevPAR calculation would look like this:

4000 / 20 = a TRevPAR of $200

Once you have this number, you can look to improve it over time, or you can index it against competitors to see how you’re performing against the broader market.

Why is TRevPAR the better data to track??

Given you have the capability to accurately measure your pricing and revenue data, TRevPAR will give you many more options in how to conduct your revenue management strategy. You can:

1. Analyse the geography of your guests

Was the TRrevPAR higher or lower depending on the demographic that was staying in a particular month? If, for example, TRevPAR increased with greater numbers of guests from Europe, or more specifically a country in Europe like Switzerland, you can target to increase the share from that market. Did the increase come from your rooms or amenities?

2. Investigate other segments

As with the geography, you might look at what is influencing increased revenue and how to capitalise on it. Could it be that women produce more revenue than men, or families more than other leisure groups?

3. Evaluatethe performance of amenities

Was TRevPAR up in July? Perhaps it’s because you have an outstanding pool area. Was it up in January? Maybe your heated spa is attracting more guests.

4. Be more accurate with pricing

By taking in the big picture, you can be informed about how much you need to be selling your rooms for and how this should change throughout the seasons.

Ultimately, it looks like TRevPAR measurement is the new way forward for revenue management, given it provides more accurate data and more options for you to adjust your pricing strategy and marketing approach.

How do you increase TrevPAR for hotels?

When you arm yourself with a TRevPAR number, you give yourself a foundation to build upon. The aim should be to increase your TRevPAR, both in pure terms and relative to your competitors. But how exactly might you push your TRevPAR up?

Here are three effective ways.

Enhance the guest experience

When you elevate the guest experience, you can charge more for that guest experience. Actively solicit guest feedback, or place yourself in your guest’s shoes and experience the customer journey, through booking, check-in, the on-site experience and check out. Consider ways to enhance this experience; everything from automated check-in, to a welcome drink, to higher thread-count sheets can all help you charge a more premium rate, increasing your TRevPAR.

Offer add-on services

As a metric that takes in all the revenue that lies beyond room rates, TRevPAR can help you identify opportunities for value-adding services. Could you expand your room service options, build an on-site bar, run local tours or offer a day spa service? Think of the services that guests enquire about most, and consider offering them on-site.

Leverage technology

The most effective way to improve TRevPAR is to ensure that your available rooms are as full as possible. And the most effective way to fill your rooms is with the help of technology.

A complete hotel management system like Little Hotelier is the perfect partner, as it streamlines and simplifies the management of your hotel while driving up to 46% more direct bookings.

By Dean Elphick

Dean is the Senior Content Marketing Specialist of Little Hotelier, the all-in-one software solution purpose-built to make the lives of small accommodation providers easier. Dean has made writing and creating content his passion for the entirety of his professional life, which includes more than six years at Little Hotelier. Through content, Dean aims to provide education, inspiration, assistance, and, ultimately, value for small accommodation businesses looking to improve the way they run their operations (and live their life).