RevPAR is a key metric used to measure how efficiently a hotel is performing financially. It calculates the average revenue generated per available room — whether it is occupied or not.
It is calculated using one of the following formulas:
RevPAR = Total Room Revenue ÷ Total Available Rooms
or
RevPAR = ADR × Occupancy Rate
RevPAR is one of the most important indicators of a hotel’s financial performance. It combines two metrics — Average Daily Rate (ADR) and Occupancy Rate — to show how effectively a hotel fills its rooms at profitable rates.
Hotel managers use RevPAR to evaluate performance, compare results across different time periods, and benchmark against competitors.
Hotels track RevPAR daily, weekly, or monthly using PMS or RMS dashboards. It helps guide critical decisions such as pricing adjustments, promotional offers, and demand forecasting.
You can increase RevPAR in two ways: by raising room rates (ADR), by improving occupancy, or by doing both. However, focusing only on discounts to boost occupancy can reduce long-term profitability.
