What does LPAR stand for in the hotel industry?
July 6, 2020|Hotel Marketing

Believe it or not, they're a lot of hotels that do not track their labor costs, or if they do, they track them inaccurately. Whether you are a small or big hotel, labor will be one of the major operating expenses. Allocate your labor costs properly to maximize your hotel's profitability.

LPAR, which stands for labor per available room is a benchmarking tool that gives you a better picture of how much you spend on labor expenses across all your rooms. To calculate your LPAR, add all of your labor costs, including wages, salaries, pensions, and holiday rooms in your hotel for a given period, whether they are booked or not.

Let’s say your hotel spends a total of $5 Million on labor expenses annually. If your hotel has 100 rooms available for 365 nights, your LPAR is $136.99. In other words, your hotel spends $136.99 per room on labor.

Track your LPAR across different departments in your hotel. Which departments are you spending more on? Does your spending translate to higher efficiency? If your hotel has plenty of rooms, but no full dining and drinking options, your room service costs will likely be higher than your F&B cost.

Compare your LPAR with other hotels in your local market. Are you spending more than your competition in the same segment? Does your spending translate to higher revenues? Have some context to know if you are spending more than you should be to achieve your profit margins.

Lastly, make the necessary adjustments to your labor spending to improve your profitability.

If you want to know more about LPAR, or if you need help in setting up a revenue management strategy, call us at 888-999-8086 or email us at support@bezla.com.

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