For years, hotels have relied on metrics like RevPAR (Revenue per Available Room) to gauge performance. It’s simple — just revenue from rooms, divided by the total number of available rooms. And while it’s helpful, it’s also limited. In today’s world, guest expectations go beyond a good night’s sleep, and hotels are offering way more than just rooms. Enter TRevPAR and TRevPAB.
These two metrics, Total Revenue per Available Room (TRevPAR) and Total Revenue per Available Bed (TRevPAB), give a fuller picture. They consider not just room revenue, but everything a guest spends during their stay — from dining and spa treatments to event spaces and recreational activities. These metrics are gaining ground because they align with how hotels operate now: not just as places to stay, but as hubs for experiences and amenities. Focusing on total revenue helps hotels see the bigger picture, capturing every opportunity to increase profitability.
What is TRevPAR (Total Revenue per Available Room)?
Alright, let’s break down TRevPAR. While RevPAR only looks at room revenue, TRevPAR includes everything a guest spends in the hotel. So, the formula is:
TRevPAR=Total Available RoomsTotal Hotel Revenue
What counts as “total hotel revenue”? Pretty much everything: food and beverage sales, spa services, parking fees, event bookings, and more. If it’s generating income for the hotel, it’s in there.
Example Calculation: Let’s say your hotel generated $500,000 in total revenue over a month, and you have 100 rooms available each night. If the month has 30 days, that’s 3,000 available room nights. Your TRevPAR would be:
TRevPAR=3,000500,000=166.67
So, your TRevPAR is $166.67, reflecting all the revenue streams from each available room. It’s a much more comprehensive view than RevPAR, which would only consider room rates.
What is TRevPAB (Total Revenue per Available Bed)?
Now, TRevPAB (Total Revenue per Available Bed) is a bit more specific. It’s helpful for properties with flexible accommodations, like shared rooms or setups where bed count varies per room. This metric calculates total revenue but divides it by available beds instead of rooms, giving a more granular look, especially in situations where different types of accommodations coexist.
TRevPAB Formula:
TRevPAB=Total Available BedsTotal Hotel Revenue
Example Calculation: Suppose your total revenue is still $500,000, but instead of 100 rooms, you have 200 beds. For 3,000 available room nights, you’d have 6,000 bed nights (assuming two beds per room). Your TRevPAB would be:
TRevPAB=6,000500,000=83.33
So, your TRevPAB is $83.33. For hotels with mixed bed setups, TRevPAB offers a more accurate revenue measure, especially for shared or family accommodations.
Why TRevPAR and TRevPAB Matter for Hotel Profitability
These metrics are more than just fancy calculations; they’re tools for maximizing profitability. By focusing on TRevPAR and TRevPAB, you’re looking beyond room rates and diving into every possible revenue stream.
Unlike RevPAR, which can mask lost opportunities in dining, amenities, or events, TRevPAR and TRevPAB show the full potential of your property. For example, if you notice that TRevPAR is low despite high room rates, you might need to rethink your ancillary offerings. Maybe guests aren’t spending as much on F&B or spa services. By identifying these gaps, you can create new revenue opportunities, like bundling dining with rooms or offering day spa passes to non-hotel guests.
How to Calculate TRevPAR and TRevPAB Accurately
Now, let’s dive into the practical side. Calculating TRevPAR and TRevPAB involves more than a simple formula. Here’s a step-by-step guide:
- Calculate Total Revenue: Start by adding up all revenue sources — rooms, F&B, events, parking, and anything else that brings in money.
- Determine Available Rooms or Beds: Decide whether you’re calculating by room or by bed, depending on what’s more relevant to your property’s setup.
- Apply the Formula: Use the TRevPAR or TRevPAB formula based on the available rooms or beds.
Scenario: Suppose you’re a resort with a busy spa and several dining options. You notice that while occupancy is high, TRevPAR is lower than expected. By digging into the numbers, you realize that guests aren’t spending as much on dining. With this insight, you could launch a meal package to boost F&B revenue and increase TRevPAR.
Factors That Influence TRevPAR and TRevPAB
A variety of factors can affect these metrics, so understanding them can help you make adjustments to boost total revenue:
- Internal Factors: Pricing strategies, menu offerings, upselling techniques, and guest experience all play a role. For example, offering exclusive room packages with dining or spa credits can increase total revenue.
- External Factors: Seasonality, local events, competitor pricing, and economic trends also impact revenue. A nearby festival, for example, might boost TRevPAR if you capitalize on event-driven demand with attractive packages.
Example: Let’s say you add a rooftop bar. Initially, TRevPAR might not change, but as guests start enjoying this new offering, the additional revenue from drinks will show up in your TRevPAR numbers, reflecting the investment’s impact.
Challenges and Common Pitfalls in Using TRevPAR and TRevPAB
Like any metric, TRevPAR and TRevPAB aren’t perfect. Here are some common challenges:
- Overemphasis on a Single Metric: While TRevPAR and TRevPAB are comprehensive, they’re not everything. Balance them with metrics like RevPAR, ADR, and occupancy for a well-rounded view.
- Misinterpreting Data: It’s easy to see low TRevPAR and jump to conclusions. Sometimes, external factors (like a recession) might lower revenue across the board, not just in ancillary services.
Tip: Use TRevPAR and TRevPAB as part of a broader revenue management strategy. They’re powerful tools, but only when combined with a deeper understanding of guest behavior and market conditions.
Conclusion: The Future of Hotel Revenue Metrics
If you’re looking to move beyond traditional metrics like RevPAR, adopting TRevPAR and TRevPAB could be the game-changer. These metrics help you focus on what really drives guest satisfaction and loyalty: a holistic, revenue-centered approach that covers every corner of your property. So, take the plunge, explore your property’s full revenue potential, and make TRevPAR and TRevPAB an integral part of your revenue strategy.
