What is RevPAR anyway?

RevPAR is the Hallmark index of hotel revenue management because it is all encompassing; RevPAR incorporates both occupancy and ADR into one, easily digestible number.  The RevPAR, or Revenue Per Available Room equation is as follows:

 

Room Revenue / Rooms Available for Sale = RevPAR

or

Occupancy % * ADR = RevPAR

 

 RevPAR is so useful because it factors in the performance of both rooms sold and unsold, and is therefore a good measure of the hotel’s holistic performance.  A way to think about RevPAR is to ask the question: ‘How much money is each room in the hotel making, regardless of whether it is occupied’?

There is no single number that indicates a good or bad RevPAR.  An $80 RevPAR for an entire year may be stellar in certain markets, but terrible in others.  RevPAR can be assessed and measured for any period of time; a hotel may average a $50 RevPAR on Sundays, have a Year-to-Date RevPAR of $75 and have a running 365 day RevPAR of $68.  RevPAR is usually compared against a hotel’s Cost Per Occupied as a measure of profitability.

 

Check out the guide below to know more!

 

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