There are many metrics that matter for hotel owners, and TRevPAR is undoubtedly one of them. In the following article, we will discuss the TRevPAR concept in detail. We’ll go over what it is, a formula to calculate it, and we’ll also compare RevPAR and TRevPAR to make sure you know the difference between the two.
Let’s start by giving you a working definition of TRevPAR. TRevPAR is total revenue per available room. This is an assessment of the total income that a hotel generates on a per-available-room basis.
You can regard TRevPAR as a metric that gives you a meaningful look at your hotel’s performance. Essentially, you do this by calculating your total revenue by the total number of your available rooms.
Having a working formula for calculating TRevPAR is crucial for all hotel owners if they are going to learn from this vital metric. The formula is as follows:
TRevPAR = Total Revenue/Total Available Rooms
As you can see by the formula, what you are calculating is the property’s total net revenue generated by guests divided by total rooms that are available during a given period.
The way you calculate the total available room is by multiplying the number of available property rooms by the nights within a particular period. For instance, that period could be a month or a year.
Now, let’s use the TRevPAR formula so you can see how it works when applied to a hotel. Let’s say that you have a 30-room hotel. In September, it generates $28,000 with rooms. However, during that same time, it also generates $3,000 from meals sold to guests and $800 in equipment rentals.
If so, then the total revenue for that hotel for that month would be $31,800. You get that number by adding those three revenue sources together. To get the total available room nights for September, you would multiply 30 by the 30 rooms the hotel has available. 30 rooms x 30 days equals 900.
To calculate TRevPAR for the month of September, you would divide $31,800 by 900. When you do that calculation, you would get $35.33. That means the hotel’s total revenue per available room for that month would be $35.33.
Many individuals in the hotel industry are also aware of the metric RevPAR. It is worth talking about in the context of TRevPAR. The two concepts are related, but not identical.
The most crucial thing to remember about TRevPAR is that it includes all revenue sources within your hotel, and not just the revenue of a room. RevPAR, by contrast, only includes your room revenue that is on a per-available-room basis.
Sometimes, you will see where a hotel has the highest RevPAR. If so, that’s great, but when you look at TRevPAR instead, you can see that hotel is actually being outperformed. When that happens, it is invariably due to the revenue streams that are coming in from other departments.
You should also remember that TRevPAR does not take any of your expenses into account. Because of this, you can’t use it solely to determine your hotel’s overall efficiency and profitability. Just because it has that limitation, though, that does not mean it’s not a useful metric to know how to measure the revenues generated.
Now, let’s talk about some ways you might increase TRevPAR if you are focused on this metric for your hotel. One way you can do that is to offer add-ons.
Offering add-ons to maximize your revenue is something that hotels have been doing for quite some time. A themed dinner night could be an option. Maybe you can entice your guests with a luxurious spa treatment. A breakfast package is another attractive option.
Offering exclusive experiences or bundling services are reliable ways to boost your revenue, and thus, your TRevPAR. You just need to make sure that you are offering add-ons that your guests are going to like and will be willing to pay for.
Studying the demographics that frequent your hotel can be helpful in this regard. Remember, what you’re trying to increase is the average spending of each guest.
You might also want to consider partnering with agencies or companies that can send groups in the direction of your hotel. There are companies like Surf Office, for instance, that will recommend to corporate guests that they should stay at your property.
When you partner with one of these entities that act like agencies, they take a commission, but it’s often still worth it for your business. That’s because a good-sized corporate group is almost certainly one that will increase your TRevPAR.
In addition to rooms for all attendees, they also typically need food and beverage services and meeting rooms. You can see how hosting this sort of group would be beneficial for your hotel.
Personalizing the guest experience is about as fundamental of a way to boost your TRevPAR as you can get. Guest satisfaction should always be on the mind as a hotel owner, and a more customized experience is something that hotel guests often remember. If a guest is more satisfied with their experience when visiting your property, that almost always leads to increased spending.
If you have repeat guests, look at their spending habits the last time they were there. Utilize that data to the best of your abilities. If a former guest likes a certain kind of room, make sure it is available for them. If you know they like to order a particular bottle of champagne when they stay with you, make sure you have it ready to offer them.
Guests appreciate this personal touch. It makes them feel pampered. If you can make recommendations based on the past activities you know the guest enjoyed, that makes the guest feel like you value their business and are going the extra mile for them. That is precisely the kind of behavior that can lead to a long-term guest relationship with your hotel. When that happens, additional spending is virtually guaranteed.
When it comes to TRevPAR, getting creative with unused spaces in your hotel can also be helpful. Maybe you have some empty space in the lobby that doesn’t see much use. Perhaps you have a store room that could be cleaned out or repurposed.
When you do that, you can strategize about what to put in there that guests would enjoy and that can become a part of your property’s value proposition. You might set up a coworking space, a yoga studio, have an open mic night, or have a standup comic come in and perform. When you have additional activities onsite, you can charge guests to attend.
This can also connect hotel goers with your local community. Creative activities in underutilized spaces can improve the guest experience and drive more revenue. This potentially boosts your TRevPAR, as guests who don’t want to leave the hotel have additional options if they’re looking for something to keep them entertained in the afternoon or evening.
Segmented marketing is something else you can try that can improve your hotel’s TRevPAR. What it involves is knowing everything about your target market.
You can segment an audience based on a plethora of factors. Some of the most common ones include booking behavior, travel purpose, or demographics.
Once you have a handle on these things, you can adjust your marketing strategies accordingly. It helps to have individuals on staff who are expert marketers and who can advise you on what tactics are liable to get you the best results in this area. When you follow their advice, you can feel confident that your offers and promotions are aligning with the wants and needs of your would-be customers.
If you’re trying to target the business class, for instance, know that they will probably demand high-speed Wi-Fi that’s 100% reliable. They might want conference rooms right there in the hotel that they can access for Zoom calls or in-person meetings. Making such things available to them makes it much more likely that the average business traveler who stays in your hotel will spend more money than they otherwise might.
You can also modify your strategy if your hotel is more into accommodating vacationing families. Package deals that include meal plans or transportation to and from local attractions will entice such guests to spend more.
Now, let’s conclude by looking at some additional ways you can boost your TRevPAR. What follows are some strategies that are sometimes overlooked, even by experienced hoteliers.
If you are going to increase your hotel’s TRevPAR, part of that often involves incorporating advanced insights and analytics. You should not try to implement a random strategy for TRevPAR and hope that it works. Instead, the way you market your hotel and what you offer to guests should only be based on meticulous analysis of information you have gathered.
There are often bespoke software programs you can use that will help you in these areas. Once you have the numbers, you can use them to plan what your next promotion might look like. You can do things like monitor revenue streams and understand common guest booking patterns. When you have these insights as a hotelier, you can identify growth opportunities, refine your strategies, and make informed decisions.
Once again, though, it won’t do you much good to be able to gather this information if you don’t have the individuals on staff who can help you determine what it means. This is where hiring the right members for your marketing team can make such a huge difference.
Management of your distribution channels is also vital. What you want is to establish a working relationship with an entity that can connect to as vast of a network of distribution channels as possible. Those will likely include places where potential guests can do direct bookings and OTAs.
This ensures that your rooms reach a wider audience of individuals, families, and groups that might be interested in them. If you have centralized control and real-time updates, it’s easy to imagine how much of a difference that can make. With such factors at your disposal, you can manage your bookings efficiently.
That’s not all, though. You can also reduce any discrepancies or overbookings. Sometimes, keeping those mistakes to a minimum can be another way to show potential guests that you are in control of every aspect of your property and that their concerns are foremost in your mind.
If you are looking at TRevPAR as just about filling your empty rooms, then you have missed the point. While that’s always going to matter for a hotel owner, TRevPAR is a more expansive metric that takes into account all of your other revenue streams.
Because of this, you could regard it as a more comprehensive and total way of examining how your hotel is doing financially. If you like the numbers that you’re seeing when you calculate RevPAR, that’s always good, but, as we saw earlier, TRevPAR gives you more information than that other popular metric.
Paying attention to both and acting on those numbers in the right way can hold the key to maximum profitability as a hotelier. Provided you have the software to calculate the numbers correctly and the supporting staff to know how to act on that data, you can use TRevPAR to get an in-depth look at how your hotel is doing and what changes you would be wise to implement.
With that in mind, let’s talk about dynamic hotel pricing. As a hotel owner, you should know about this strategy and when to employ it.
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