Profit Per Available Room (PROFPAR) is a calculation of hotel profit earnings for each available room on the property. The calculation is made using operating profit, which accounts for changes in room revenue and operating expenses. For hotel owners, PROFPAR is a good metric for evaluating sales growth and management’s ability to control operating expenses.

What is Profit Per Available Room (PROFPAR) For?

Many hotels are calculating PROFPAR to assess profitability of group sales. In some cases, it can be used to assess whether to accept a group booking based on average ancillary spend on other hotel features, services, or amenities.

Benefits of Profit Per Available Room (PROFPAR)

PROFPAR is more common amongst hotel chains. It is a beneficial metric for tracking whether or not a hotel or property is effective in generating its share of profit. PROFPAR also helps revenue managers determine whether or not to sacrifice their Average Daily Rate (ADR) for a more lucrative group booking at a lower daily rate.

Limitations of Profit Per Available Room (PROFPAR)

Because PROFPAR is calculated using operating profit, it is not subject to all the limitations of RevPAR, such as a failure to account for operating expenses. However, PROFPAR (like RevPAR) doesn’t account for profits earned from other hotel services or amenities. This means that any strategic decisions made to improve hotel profitability shouldn’t be made solely based on a property’s PROFPAR.

How is Profit Per Available Room (PROFPAR) Calculated

PROFPAR is calculated by dividing a hotel’s operating profit per year by the number of daily available rooms per year.

Example of Profit Per Available Room (PROFPAR) Calculation

PROFPAR = Operating Profit Per Year / Daily Available Rooms Per Year

Operating Profit Per Year = $3,465,000
Daily Available Rooms Per Year = 2,500

PROFPAR = $3,465,000 (Operating Profit Per Year) / 2,500 (Daily Available Rooms Per Year) = $1,386