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What is TrevPAR and how do you calculate it?

  Posted in Resources

TrevPAR is a key performance indicator to track on a regular basis at your hotel. Just like other metrics such as RevPAR and ADR, TrevPAR will give you key insights into how revenue is being earned at your property and what you can do to optimise it.

So let’s take a closer look at the meaning of TrevPAR.

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What is TrevPAR?

TrevPAR stands for total revenue per available room. TrevPAR accounts for all the ways your hotel makes money and applies it back to how many rooms you have.

For example, your hotel will take revenue from all sorts of places including your bar, restaurant, parking, pools and spas, mini bar, massages, exercise classes, gym, retail sales, activity bookings etc.

There’s a lot more money coming in outside of reservations. However, it’s still relevant to track this against your rooms because the money is still being generated from the guests in those rooms.

How to calculate TrevPAR

TrevPAR is calculated by dividing total revenue by the total number of rooms.

So if your hotel revenue for a day was $15,000, for example, and your hotel has 110 rooms, TrevPAR would equal $136.

Naturally you’ll want to try to increase TrevPAR as this will indicate an increase in average revenue, occupancy, or both.

Why should you use the TrevPAR formula?

Since TrevPAR takes into account all revenue of your hotel and relates it back to the number of rooms, you could argue that it provides a better ‘big picture’ view than a metric like RevPAR does.

Especially if you are a larger hotel, different departments such as restaurants, bars, or other amenities can have a big impact on overall business success. TrevPAR is a great way to consider all the factors that generate revenue from guests.

Tracking TrevPAR also allows you to look into how you can gain an edge on competitors or learn more about your guests. If you compare your hotel with competitors and notice price disparities between similar services, there may be a chance to raise some of your fees and increase your revenue, without losing business.

Similarly, if you notice guests are flocking to a particular amenity or menu item, you can safely increase prices without harming popularity – again increasing your TrevPAR figure.

TrevPAR vs RevPAR

At first glance TrevPAR appears very similar to RevPAR (Revenue per available room) but it’s quite a different measurement. While RevPAR relates only to room revenue, TrevPAR accounts for the total revenue of your property and measures it against your guest rooms.

Both are useful and perfectly viable metrics to track, with RevPAR providing the quickest and easiest way to keep an eye on your hotel’s performance.

However, neither takes into account any costs incurred or the actual occupancy rate of your hotel.

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