Total revenue per available room, or TRevPAR, is a KPI used by those within the hotel industry to assess business results. It is concerned with total revenue generated from rooms, and space available. As a result, it can play an important role in a revenue management strategy, and can provide a useful snapshot of overall performance.
What does TRevPAR stand for?
TRevPAR, or total revenue per available room, is used within the field of revenue management to assess total amount of revenue generated by a property, on a per room basis, regardless of whether rooms are sold. As a KPI, its value is in demonstrating how effectively space is being used for revenue generating purposes.
In general, hotels should aim to increase TRevPAR, because that is indicative of either an increase in average revenue, an increase in occupancy, or both. TRevPAR can be calculated with the following formula:
TRevPAR = Total Revenue / Number of Available Rooms
What is the Difference Between RevPAR and TRevPAR?
Although the metrics of RevPAR and TRevPAR seem pretty similar on the surface, there is one key difference between the two. RevPAR, as a KPI, is concerned solely with revenue generated from selling rooms, while TRevPAR factors in all revenue, including money spent on room service, in the restaurant, at the bar, etc.
Uses and Limitations
TRevPAR has a valuable role to play as a hotel industry revenue management KPI, because it provides similar information to RevPAR, but factors in all revenue generated from rooms, rather than simply the room rate. It can, therefore, provide a better view of the big picture, allowing for pricing adjustments to be made.
With that being said, there are certain limitations to TRevPAR as a performance metric. It does not take into account any costs incurred by the hotel, and it also does not factor in the actual level of occupancy.
More Revenue Management KPI’s
KPI stand for Key Performance Indicator. With KPI’s you can measure and identify areas of success and failure, as well as trends related to demand and customer behaviour. Besides TRevPAR, other important Revenue Management KPI’s are Occupancy rate, RevPAR, RevPOR, ADR, NRevPAR, EBITDA, ARPA and GOPPAR.