Riddle: Two hotels have the same number of rooms and charge the same rates.
NB: This is an article from WebRezPro
On a given night, both book an equal number of rooms. However, in our imaginary revenue competition, there is a clear winner. How is this possible? The answer is simple (and the title of this post may be a giveaway!).
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TRevPAR is a key performance indicator (KPI) calculation that offers hotels a broader perspective on their performance compared to RevPAR. Let’s delve into the differences between these metrics and explore ways for your hotel to measure and maximize TRevPAR to achieve a diversified, stable revenue stream.
The Beauty of TRevPAR and Why It’s Important
If KPIs get you excited, TRevPAR will knock your socks off.
Competitive Analysis
TRevPAR is a useful metric for comparing your performance to that of your competitors. In our example above, Hotel 1 might examine their restaurant after noticing that Hotel 2 has a higher TRevPAR. Through this analysis, they may discover that their competitor offers higher-priced menu items. This presents an opportunity for Hotel 1 to increase its prices, thereby boosting its revenue while still remaining competitive.
The Big Picture
While helpful with competitive analysis, TRevPAR is an important measurement even if you’re the only hotel in town. In 2022, hotel rates in Europe increased by 19% and in North America by 14% (STR), partly in response to inflation and the growing demand for travel. However, there are signs of a looming tipping point, where demand decreases and rates must subsequently adjust. RevPAR plays a crucial role in telling this story. Yet, since hotels cannot depend on perpetually increasing room rates, TRevPAR can demonstrate the extent to which diverse revenue streams either support or fail to compensate for reduced room revenues.
Track Trends
Track TRevPAR on a monthly or seasonal basis to identify trends. This allows you to predict and prepare for periods of lower demand while determining what is and isn’t effective—something that RevPAR alone cannot accomplish. For example, you can identify services or departments that drive revenue and when, then implement marketing strategies to generate even more.
Identify Opportunities With Guest Segments
Analyze guest data in conjunction with TRevPAR trends to gain a deeper understanding of your guest segments and behavior, for example, how they respond to services and changes at your hotel and their preferences. For instance, you may discover that one segment is willing to pay more for a room, while another segment is more budget-conscious but tends to spend more on ancillary services.
Maximize Your Hotel’s TRevPAR
Now that we understand how TRevPAR works and why it’s an important metric, let’s explore ways to increase and enhance it!
Can you say upsell? TRevPAR revolves around diversifying your revenue streams. If you’re new to tracking TRevPAR, you might discover that you already have a healthy measurement. However, there are always opportunities for growth, so let’s look at what we’ve learned from our hotel partners!
