Ancillary revenues and maximising Total Revenue per Available Bed (TRevPAB) for hostels

Jan 16, 2024

In the dynamic and ever-evolving realm of hostels, measuring success extends beyond merely assessing the number of occupied beds. Thriving in the competitive hostel industry requires adopting a comprehensive approach to revenue management that goes beyond traditional metrics.

From a revenue perspective, one of the most notable distinctions between hostels and comparable hotel operating models lies in the relative contribution of ancillary revenue sources to the total revenue equation. Whilst midscale and economy hotels primarily derive their revenue from room sales, hostels operate on a different paradigm, generating income from two distinct sources: beds and a myriad of supplementary amenities.

As hostels continue to adapt and evolve in response to shifting traveller expectations, understanding the concept of Total Revenue per Available Bed (TRevPAB) and harnessing the potential of ancillary revenues are important for maintaining a competitive edge.

The rise of TRevPAB and its importance for hostels
Unlike traditional performance indicators like RevPAB, average daily rate (ADR), and occupancy (OCC), TRevPABprovides a comprehensive overview of a hostel’s financial performance, encompassing all revenue streams generated by the property, not just bed income.

Why should hostels care about TRevPAB? Travellers are increasingly value-conscious, primarily due to inflation, rising travel costs and economic uncertainties. In such an environment, hostels need to explore new avenues for revenue growth beyond just bed occupancy.

Understanding TRevPAB for hostels
TRevPAB for hostels is calculated by dividing the total net revenue generated by the property during a specific period by the total available bed nights within that period. This calculation includes revenue from various sources, such as linen, lockers, food and bar services, bike rental, tours, early check-in/late check-out fees and miscellaneous income such as cancellation fees.

What sets TRevPAB apart from RevPAB is its all-encompassing nature. Hostels, which often offer an array of services and experiences beyond just accommodation, benefit greatly from this broader perspective. TRevPAB allows operators to assess their performance in attracting guests to spend money on on-site services, making it an ideal metric for hostels aiming to enhance the overall guest experience.

TrevPAB captures revenue streams unique to hostels and offers potential revenue management solutions not available to competitor hotels, making it a vital metric for hostels to track. As travellers seek value and unique experiences, hostels must adapt by optimising ancillary revenues and taking a holistic approach to revenue management. By understanding the significance of TRevPAB and implementing strategies tailored to their offerings, hostels can not only survive but thrive in the competitive world of hospitality.

If you are interested in finding out more about ancillary revenues, join us at STAY WYSE Munich, 5-7 February 2024, during which Stasher will delve into what technology is needed to enhance the next-gen guest experience whilst helping to achieve positive results to your bottom line. Find out more here.