TRevPAR and ARPAR: measuring more than room sales
Why a hotel with a restaurant or spa should track TRevPAR and ARPAR beside RevPAR, and where each figure sits in the books when the till and invoices post.
By Achekam · · 5 min read · For Hospitality businesses in South Africa, Nigeria, Kenya
A lodge with a busy restaurant and a small spa can have an ordinary RevPAR and still be the most profitable property in its valley. Another can post an excellent RevPAR while losing money on every room it fills, because each stay costs more in cleaning, power and amenities than anyone has counted. RevPAR alone sees neither.
Two related measures fill the gaps. TRevPAR brings the rest of the property's revenue into the picture; ARPAR takes the cost of each occupied room out of it. This piece explains what each one adds, which figures it needs, and where those figures sit in your books.
What RevPAR leaves out
Investopedia explains that RevPAR is calculated either by dividing total room revenue by the total number of rooms available, including those not occupied, or by multiplying the average daily rate by the occupancy rate. It also cautions that an increase in RevPAR does not necessarily mean higher profits, because RevPAR measures revenue only and ignores expenses and the size of the hotel.
So RevPAR misses two things a property with outlets needs to know: what guests spend beyond the room, and what the room costs to sell. If you have not yet set up the basic calculation, working out RevPAR from your books covers it.
TRevPAR: the restaurant, spa and pool count too
Investopedia describes total revenue per available room (TRevPAR) as a variant of RevPAR that also includes revenue earned from amenities such as spas, pools, entertainment areas and restaurants. The denominator stays the same, available rooms, while the numerator grows to cover the whole property.
TRevPAR tells you whether guests are spending on the property or only sleeping there. A falling TRevPAR with a steady RevPAR points to the outlets: a restaurant guests skip, a spa with empty slots, a bar that closes too early.
It needs:
- room revenue for the period;
- revenue from each outlet for the same period;
- the available room-nights, counted the same way as for RevPAR.
ARPAR: taking the cost of each occupied room out
Investopedia describes adjusted revenue per available room (ARPAR) as taking the average daily rate, subtracting variable costs per occupied room, such as cleaning, utilities and supplies, and adding additional revenue per occupied room, such as room service.
ARPAR is the closest of the three to asking "what does a guest night actually earn us?" A rate cut that fills rooms may lift RevPAR and leave ARPAR flat, because every extra stay brings its own laundry, power and amenity costs.
It needs:
- the average daily rate (room revenue divided by room-nights sold);
- the variable costs of occupied rooms, from your cleaning, laundry, utilities and amenity accounts;
- the room-nights sold, to turn those costs into a per-room figure;
- revenue earned per occupied room beyond the rate, such as room service.
Where each input sits in the books
The available and sold room-nights come from your reservations records. Everything else should come from the ledger, and the way revenue posts in Achekam shapes how easy that is.
Till revenue. Every till sale that reaches the server posts a balanced journal in the same step, with each payment method to its own account, revenue, output VAT, and cost of sales against inventory at the product's cost price. Till revenue posts to one revenue account (4000), so the restaurant, bar and spa tills all land on the same line.
Invoiced revenue. All invoice revenue posts to one account, Professional Services Revenue (4100), and an invoice line cannot name another sales account today. Room charges and venue hire you invoice share that account.
Costs. Cleaning materials, laundry, utilities and guest amenities are recorded on their own expense accounts through supplier bills, which is what ARPAR needs.
To read room revenue and each outlet separately, most properties post a month-end reclassification journal: room charges out of the general invoice revenue account into a Room revenue account, and each outlet's till takings into its own outlet revenue account, supported by the till totals. A business can post manual journals; an unbalanced journal or one dated in a closed month is refused, and a posted journal is corrected only by a reversal.
One journal per sale, or one per session
A business can choose whether the till posts one journal per sale or one summary journal per till session per day. The choice affects how easily you can read outlet revenue back from the ledger:
| Choice | What the ledger shows | Best when |
|---|---|---|
| One journal per sale | Every sale as its own entry | You want to trace individual sales from the ledger |
| One summary per session per day | One entry per till session per day | Each outlet runs its own till session and you want daily totals |
If the restaurant, bar and spa each run their own till session, the daily summaries make the monthly reclassification much quicker to prepare: each outlet's total for the month is the sum of its sessions. The till totals themselves are reviewed at cash-up, as described in closing the business day.
Reading the figures each month
The management accounts show an income statement for the chosen period beside the period before, added up from the business's own journals and exportable as PDF or CSV. Once the reclassification is posted, room revenue and each outlet appear on their own lines, and the cost accounts behind ARPAR are on the same report. Export it, add the room-night counts, and the three measures take a few minutes:
- RevPAR from room revenue and available room-nights.
- TRevPAR from total revenue and the same available room-nights.
- ARPAR from the average daily rate, the variable room costs per occupied room and the extra revenue per occupied room.
Track all three month by month. RevPAR shows how well rooms sell; TRevPAR shows whether guests spend on the property; ARPAR shows whether filling rooms is paying.
Investopedia's guide to RevPAR and its variants explains RevPAR, TRevPAR and ARPAR and the limits of each.
Set up the outlet and room revenue accounts before next month starts, so that the first reclassification is the only fiddly one.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
