When it comes to measuring the success of a hotel, RevPAR (Revenue Per Available Room) often takes center stage. It’s a simple metric: total room revenue divided by the number of available rooms. But here’s the catch—focusing solely on RevPAR is like judging a restaurant’s success by its appetizers alone. There’s more to the story, and this is where metrics like TRevPAR (Total Revenue Per Available Room) and GOPPAR (Gross Operating Profit Per Available Room) step in to paint a fuller picture.
Let’s break it down with some theoretical scenarios.
Scenario 1: The “Full House, Empty Wallet” Dilemma
RevPAR Says: “You’re Winning!”Imagine a boutique hotel with 100 rooms, all fully booked for a weekend. RevPAR is through the roof at $200. Sounds great, right?
TRevPAR Tells a Different Story: Now, let’s consider TRevPAR. Guests booked rooms but didn’t spend much on dining, spa treatments, or other amenities. Total revenue, including room, F&B, and other services—is $25,000. That’s a TRevPAR of $250.
GOPPAR Sets the Record Straight: After accounting for operating costs (staff wages, utilities, supplies), the hotel’s gross profit is just $5,000. GOPPAR stands at $50—a sharp contrast to the $200 RevPAR.
The takeaway? High occupancy doesn’t always mean high profits. Without keeping an eye on ancillary revenue streams and operating efficiency, you’re leaving money on the table.
Scenario 2: The “Luxury Leisure” Upsell
RevPAR Says: “Nice Job!”A resort’s RevPAR is $300, thanks to premium room rates during peak season.
TRevPAR Says: “Keep It Up!”Guests are indulging in everything. The resort offers—fancy dinners, spa treatments, golf packages, and private cabanas. Total revenue hits $80,000 for 200 available rooms, pushing TRevPAR to $400.
GOPPAR Says: “You’re Killing It!”Because the resort’s operational costs are well-managed, 50% of that revenue turns into profit. GOPPAR? A robust $200.
Here, TRevPAR and GOPPAR confirm what RevPAR hinted at—but they also show how smart upselling and cost control amplify success.
Scenario 3: The “Hidden Cost Trap”
RevPAR Says: “It’s a Slow Day.”A city hotel’s RevPAR dips to $80 during the off-season.
TRevPAR Says: “We’re Still in the Game.”Guests are spending money on co-working spaces and the rooftop bar, keeping total revenue at $15,000 for 100 available rooms. TRevPAR climbs to $150.
GOPPAR Says: “We’re Not Out of the Woods Yet.”However, higher marketing expenses to attract off-season travelers eat into profits. GOPPAR lands at $30, highlighting the need to control costs even when diversifying revenue streams.
Why It Matters
RevPAR is just one piece of the puzzle. While it’s a handy snapshot of room revenue performance, it doesn’t account for how well a hotel’s other revenue streams are performing or how efficiently it’s managing expenses. By focusing on TRevPAR and GOPPAR, hoteliers get a clearer view of their property’s overall financial health—from revenue potential to profitability.
RevPAR (Revenue Per Available Room) is a valuable metric, but it tells only part of the story. While it provides a quick snapshot of room revenue performance, it overlooks critical aspects of a hotel’s financial operations. For instance, RevPAR doesn’t account for other revenue streams such as food and beverage, spa services, or event spaces, which can significantly impact a hotel’s bottom line. Nor does it shed light on cost management efficiency, which is essential for maintaining profitability in an increasingly competitive landscape.
By shifting focus to metrics like TRevPAR (Total Revenue Per Available Room) and GOPPAR (Gross Operating Profit Per Available Room), hoteliers gain a more comprehensive understanding of their property’s financial health. TRevPAR considers all revenue streams, offering a holistic view of a hotel’s ability to generate income from every part of the operation. GOPPAR goes a step further by factoring in expenses, providing insights into operational efficiency and profitability.
This broader perspective is crucial for making informed strategic decisions. For example, a hotel with strong RevPAR might seem successful at first glance, but if other revenue streams are underperforming or costs are poorly managed, overall profitability could suffer. Conversely, a property with modest room revenue but strong performance in other areas could be thriving.
Ultimately, understanding and leveraging these metrics equips hoteliers with the tools to uncover hidden opportunities, address inefficiencies, and drive long-term profitability. It’s not just about how much revenue is coming, it’s about how that revenue translates into profit.
So, the next time someone boasts about their RevPAR, ask them: What about TRevPAR and GOPPAR?” Because at the end of the day, profit is what really matters.
Want to dive deeper into your property’s performance metrics and unlock true profitability insights? Explore how HotStats can help you make smarter decisions with a complete financial picture.
Contact us today and let’s start the conversation.Email us at [email protected].
About HotStats
HotStats is a global data benchmarking company offering specialized performance analysis and a benchmarking tool that helps analyze financial and operational data from a diverse range of hotels globally. This provides hotel owners, operators, and investors with valuable insights into the financial performance of their properties against their competition – an invaluable resource for weighing options and evaluating investment opportunities. For a quick demo, email us at [email protected] or visit www.hotstats.com.
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