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How to calculate RevPAR, and what it hides
RevPAR, revenue per available room, is the number most hotels are judged on. It is easy to calculate and easy to misread, because two properties with the same RevPAR can be run completely differently.
The formula
RevPAR is room revenue divided by the number of available rooms, over the same period. Equivalently it is ADR multiplied by occupancy. A 40 room hotel selling 30 rooms at an average of 120 earns 3,600 in room revenue, so RevPAR is 3,600 divided by 40, which is 90. The same answer comes from 120 multiplied by 75 percent occupancy.
- RevPAR = room revenue / available rooms
- RevPAR = ADR x occupancy
- Available rooms includes rooms you could not sell, not just rooms you tried to sell
Why the denominator matters
The most common error is excluding out-of-order rooms from available rooms. It flatters RevPAR precisely when maintenance is worst, which is exactly when you want to see the damage. Count every physical room unless it is genuinely off the inventory for the whole period.
What RevPAR does not tell you
RevPAR is blind to what a guest spends once they are in the building, and blind to the cost of acquiring them. A property filling rooms through an OTA at 18 percent commission can show the same RevPAR as one filling them directly, while earning materially less. If you only track RevPAR you cannot see that difference.
- It ignores food and beverage and other spend
- It ignores the commission paid to fill the room
- TRevPAR and GOPPAR exist to cover those gaps
Compare it against the right period
Compare the same business dates, not the same calendar dates. A month with an extra weekend is not comparable to one without, and a public holiday moving between years will distort a year-on-year read. Anchoring to business date is why a nightly audit matters.