Revenue per Available Room (RevPAR) is a critical metric for hotels to plan for high and low seasons. It helps hotels measure the efficiency of their operations by tracking how well they’re filling available rooms at their Average Daily Rate (ADR). And since RevPAR measures revenue made during a certain period of time, it can be used to compare any given time period against previous periods, and measure the long-term performance of a property.

What is Revenue Per Available Room Used For?

RevPAR is used to evaluate the overall performance of a hotel. Room revenue and occupancy rate are the major criteria that factor into RevPAR. So a marked increase in RevPAR is a signal that average room rates or occupancy rates are increasing.

Benefits of Revenue Per Available Room

RevPAR allows revenue managers to compare revenue for a given period against previous periods. For example, it allows revenue comparisons for the current calendar year against the previous year’s numbers. This helps managers understand long-term performance and forecast future trends.

Limitations of Revenue Per Available Room

RevPAR only allows comparisons of income as a percentage of room sales. This does not factor in additional services offered at a hotel property, such as tour sales, room services, spa bookings, and other upsells. Also, unlike GOPPAR, it does not factor in the operating costs incurred in generating that revenue.

RevPAR is also subject to fluctuations resulting from seasonality, economic trends, and consumer preferences. These fluctuations make it a difficult KPI for hotels to track accurately. For these reasons, RevPAR has limitations in terms of determining a hotel’s overall profitability.

How is Revenue Per Available Room Calculated

RevPAR is calculated in one of two ways. Either by multiplying the property’s average daily room rate (ADR) by the property’s occupancy rate, or by dividing total room revenue by the total number of rooms available during the period in question.

Example of Revenue Per Available Room Calculation

We’ll calculate RevPAR using both the multiplication and division methods here.

Multiplication Method
Average Daily Rate = $200
Occupancy Rate = 80%

RevPAR = 30 (ADR) x 0.75 (Occupancy Rate) = $250

Division Method
Total Rooms Revenue = $10,000
Total Number of Rooms = 40

RevPAR = 10,000 (Total Rooms Revenue) / 40 (Total # of Rooms) = $250