Revenue per Available Room (RevPAR) measures the room revenue generated for each available room during a specific period, whether the room was sold or remained vacant. It combines room rate performance and occupancy into a single key performance indicator.
Formula
RevPAR = Total Room Revenue ÷ Total Available Rooms
Alternatively:
RevPAR = ADR × Occupancy Rate (as a decimal)
Practical Example
Suppose a hotel has 200 rooms available and generates $30,000 in room revenue during one night.
RevPAR = $30,000 ÷ 200 = $150
If the hotel’s ADR is $200 and its Occupancy Rate is 75%, the alternative calculation gives the same result:
RevPAR = $200 × 0.75 = $150
The hotel’s RevPAR for that night is $150.
How to Interpret RevPAR
RevPAR helps revenue managers evaluate how effectively a hotel generates room revenue from its available inventory. A hotel can increase RevPAR by improving its average room rate, occupancy, or both. However, RevPAR does not account for all operating costs or revenue from other departments, so it should not be treated as a direct measure of profitability.
Related Terms
ADR · Occupancy Rate · TRevPAR