A.CRE

Total RevPAR

Also referred to as TRevPAR, Total RevPAR is a comprehensive metric used in the hospitality industry to measure the total revenue generated by a hotel, encompassing all operational departments, per available room. Unlike Revenue Per Available Room (RevPAR), which strictly calculates the revenue derived from room sales divided by the number of available rooms, TRevPAR includes revenues from additional hotel services. These typically encompass Food & Beverage (F&B), Other Operated Departments, and Miscellaneous Income, providing a holistic view of a hotel’s overall financial performance.

TRevPAR = (Total Revenue) / (Number of Available Rooms)

This broader metric is particularly valuable for hotels with significant non-room revenue streams, offering a more complete assessment of operational efficiency and profitability.

Putting ‘Total RevPAR’ in Context

Mini-Case: The Seaside Grand Hotel, Miami

In Miami, Florida, the full-service Seaside Grand Hotel is renowned for its luxurious amenities and prime location near the bustling South Beach area. Managed by Bayshore Capital, a core-plus real estate investment manager, the hotel has recently undergone renovations aimed at enhancing guest experiences and increasing overall revenue streams.

Property Overview

The Seaside Grand Hotel boasts 300 elegantly furnished rooms, multiple conference facilities, a state-of-the-art wellness center, and two upscale restaurants. It also features a rooftop lounge that offers panoramic views of the Miami coastline.

Financial Context

Following the renovations, the management aimed to leverage the property’s enhanced features to optimize their Total Revenue Per Available Room (TRevPAR), a critical metric for assessing overall financial performance in the hospitality sector.

Here’s a simplified breakdown of the hotel’s revenue streams:

  • Room Revenue: The hotel averages $250 per room per night, with an occupancy rate of 80%.
  • F&B Revenue: Includes revenue from two restaurants and in-room dining services, contributing approximately $100 per available room.
  • Other Operated Departments: The wellness center and conference hosting services contribute an additional $50 per available room.
  • Miscellaneous Income: This includes earnings from the rooftop lounge events, parking fees, and other ancillary services amounting to $30 per available room.

Calculating TRevPAR

To compute the Total RevPAR, we sum the revenues from all sources and divide by the number of available rooms:

TRevPAR = (Total Revenue) / (Number of Available Rooms)

For the Seaside Grand Hotel:

TRevPAR = (300 * 250 * 0.8 + 300 * 100 + 300 * 50 + 300 * 30) / 300 = 383 USD per room

This scenario underscores the importance of TRevPAR in evaluating a hotel’s performance beyond just room sales, emphasizing the financial impact of all services provided by the hotel.

(Note: The above numbers and scenario are hypothetical.)

Frequently Asked Questions about Total RevPAR (TRevPAR) in the Hospitality Industry

Total RevPAR, also referred to as TRevPAR, is “a comprehensive metric used in the hospitality industry to measure the total revenue generated by a hotel, encompassing all operational departments, per available room.”

Unlike RevPAR, which only includes room revenue, TRevPAR includes “revenues from additional hotel services” such as Food & Beverage, Other Operated Departments, and Miscellaneous Income. It provides “a holistic view of a hotel’s overall financial performance.”

TRevPAR is calculated using the formula:
TRevPAR = (Total Revenue) / (Number of Available Rooms)

Revenue sources typically include:

Room Revenue

Food & Beverage Revenue

Other Operated Departments (e.g., wellness center, conference facilities)

Miscellaneous Income (e.g., parking fees, rooftop lounge events)

It demonstrates how a full-service hotel with multiple revenue streams can use TRevPAR to measure overall performance. After renovations, the hotel achieved a TRevPAR of $383 per room, reflecting combined income from rooms, F&B, wellness center, and other services.

Because these properties “have significant non-room revenue streams,” TRevPAR offers “a more complete assessment of operational efficiency and profitability” compared to RevPAR alone.

The hotel averaged $250 per room per night with an 80% occupancy rate, contributing to the room revenue portion of the TRevPAR calculation.

You can refer to the “Glossary: TRevPAR” link in the Related Content section of the post.

Click the link in the post that says “Click here to get this CRE Glossary in an eBook (PDF) format.”

Click here to get this CRE Glossary in an eBook (PDF) format.
by