What is the meaning / definition of NREVPAR or Net REVPAR in the hospitality industry?
NREVPAR stands for: Net Revenue Per Available Room
NREVPAR metric is similar to RevPAR, except that it factors in the net revenues (meaning that it accounts for distribution costs, transaction fees and travel agency commissions).
NRevPAR = ( Room Revenue – Distribution Costs ) / Available Rooms
Compared to REVPAR, NREVPAR removes the “apples to apples” comparison, which is absolutely necessary for effective measurement of a property’s revenue management strategies. Factoring the cost of distribution into its calculation is a more transparent performance indicator.
It is undeniably a useful calculation for Revenue Managers and owners to prepare a strategic planning for the hotel. The problem is that, it is difficult to calculate all of the many different types of commission, transaction and distribution costs.
How do you calculate NREVPAR?
NREVPAR Formula: (Room Revenue – Distribution Costs) / Available Rooms