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TRevPAR: The Most Effective Metric for Revenue Managers?

There has been a great deal of discussion as of late as to the value of the revenue management metric TRevPar (Total Revenue per Available Room). TRevPAR is calculated by dividing the total net revenues of a property (room revenues plus ancillary revenue streams such as food and beverage, rentals, etc.) by the total available rooms. Many industry experts are saying that TRevPAR is a more valuable metric than RevPAR in determining pricing strategies, but I’m here today to offer a different opinion.

TRevPAR is a fantastic metric for accountants, hotel owners and even the general manager, as it helps to determine the overall financial performance of a property. However, it is NOT a valuable metric for revenue managers. Because so many different types of revenues are included in the TRevPAR calculation, it makes it nearly impossible to isolate the information that a revenue manager needs to determine accurate pricing (according to what the market will bear).

In a hotel, different departments are responsible for ensuring that the multiple areas of a hotel are performing well financially: the F&B Manager would oversee the purchase of food/beverage items and the revenues earned through all related purchases; function space rentals would be handled by the Special Events team; and room revenues are handled by the revenue management department. So why would you use a metric that takes into consideration the financial performance of multiple departments in determining your room rates?

As you know, a revenue manager’s main goal is to be able to predict what price a market will bear up to a year in advance and then develop a pricing strategy accordingly. As someone who is responsible for the management of the majority of most hotels’ revenues, why would you use a metric that puts a percentage of the property’s earnings (and TRevPAR stat) completely outside of your personal control? If the other departments have a bad day/month/year financially, it will appear that your revenue management strategies were not effective (even though that may not be the case).

So at the end of the day, although it may not be the new metric du jour, RevPAR is still the best metric for revenue managers as it takes into consideration the details that revenue managers are concerned with: room revenues alone.

do you want to sell more rooms

 

4 thoughts on “TRevPAR: The Most Effective Metric for Revenue Managers?

  1. Makes sense…. I do believe both scenario’s are important and for the little time it takes to gather the necessary information why not offer both on your financial statements. The GM and Owners should have the TrevPar as a matter of fact weekly… and Yes the revenue managers really don’t need it…

     
    1. Things aredeveloping so rapidly, so does the way of thinking!
      There is no new thing in this changing world, including revenue managent.
      For us isto apply to most suitable and profitable fir iur hotel.

       
  2. Trevpar is a good option of the Owners ,General Manager and For the Finical Controller in order to know the profit and loss but for a revenue manager it really don’t need

     
  3. Both systems ReVpar and TRevpar both give an accurate measure of the hotel performance, however my thoughts are that REevpar, is mostly for Business more corporate hotels, while Trevpar would be excellent for resort outfits where the guests are in the hotel almost 24 hours and thus able to make multiple purchases during their Stay,

     
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