Measure a hotel's financial performance by calculating Revenue per Available Room (RevPAR)—the industry-standard KPI for profitability.
RevPAR = Total Room Revenue / (Total Available Rooms × Period Length)
A hotel earns $250,000 in room revenue over a 30-day period and has 120 available rooms:
In the hotel and lodging industry, success is measured by a set of key performance indicators (KPIs) that provide insight into financial health and operational efficiency. Among the most critical of these is Revenue per Available Room (RevPAR). It is the gold standard for measuring a hotel's performance because it provides a comprehensive view that accounts for both room occupancy and the average rate at which those rooms are sold. Our free Revenue per Available Room Calculator is an essential tool for hotel managers, revenue managers, and owners to accurately calculate this vital metric and make informed strategic decisions.
RevPAR effectively shows how well a hotel is filling its rooms and how much revenue it is generating from those bookings. A rising RevPAR indicates improving performance, while a declining one can signal issues with pricing, marketing, or guest satisfaction. Unlike Average Daily Rate (ADR), which only reflects the average price of rooms sold, RevPAR accounts for all available rooms, thus providing a clearer picture of overall profitability. A hotel could have a high ADR but low RevPAR if its occupancy is poor. The Revenue per Available Room Calculator helps you cut through the noise and focus on this all-important number.
Calculating RevPAR is crucial for benchmarking performance against competitors, evaluating pricing strategies, and forecasting future revenue. The methodology is straightforward but powerful, as explained by top industry resources like the American Hotel & Lodging Association (AHLA) and detailed in academic contexts referenced on pages like Wikipedia's entry on the subject. By consistently using our Revenue per Available Room Calculator, you can track performance trends over various periods—daily, weekly, monthly, or yearly. This allows you to assess the impact of marketing campaigns, seasonal promotions, or operational changes. Ultimately, a strong focus on improving RevPAR leads to a healthier bottom line and a more competitive position in the market.
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RevPAR stands for Revenue per Available Room. It's a critical Key Performance Indicator (KPI) that measures a hotel's ability to fill its rooms at an effective rate. It combines both occupancy and average room rate into a single metric, providing a more complete picture of performance than either metric alone.
ADR is the average rental income per occupied room for a given period. RevPAR is calculated across all available rooms, whether they are occupied or not. Therefore, RevPAR is always lower than ADR (unless the hotel is 100% occupied) and gives a better indication of how well a hotel is maximizing its total room revenue potential.
No, the standard RevPAR calculation only includes revenue generated from the sale of hotel rooms. Other metrics, like Total Revenue per Available Room (TRevPAR), are used to analyze the total revenue from all departments.
A "good" RevPAR is highly dependent on the hotel's location, class, season, and local market conditions. The best approach is to benchmark your RevPAR against your own historical performance and that of your direct competitors (Comp Set).