RevPAR (Revenue Per Available Room) is a core performance metric in hotel real estate that measures room revenue generated per room in the inventory, whether occupied or not. It’s used by owners, operators, investors and lenders to compare performance across properties, seasons and competitive sets. RevPAR captures both price (ADR) and volume (occupancy) in one number, making it a quick gauge of revenue efficiency at the room-level.
Use either formula depending on available data:
Both yield the same result; pick rooms-revenue/available-rooms when you have financial totals, or ADR×occupancy when you have operating KPIs.
RevPAR is reported daily for operational decisions, monthly for performance reviews, T12 for smoothing seasonality and cycles, and YTD for current-year trend analysis. Choose a period aligned with your decision: daily for pricing, T12 for underwriting.
| Metric | Value |
|---|---|
| Available rooms | 100 |
| Rooms sold | 72 |
| Rooms revenue | $10,800 |
| ADR (Rooms revenue ÷ rooms sold) | $150 |
| Occupancy (rooms sold ÷ available rooms) | 72% |
| RevPAR (rooms revenue ÷ available rooms) | $108 |
Or ADR×Occupancy = $150 × 0.72 = $108 — same result.
For multi-day periods compute totals: sum rooms revenue and divide by total available room-nights in the period (rooms × days). When averaging ADR across varied nights, weight by rooms sold per night rather than simple arithmetic mean. For T12, sum 12 months’ room revenue and divide by 12×rooms. Adjust for seasonal events by using comparable periods (e.g., same month prior year) or smoothing with T12.
From accounting: pull Room Revenue (P&L) and use the property room count × days available in period for denominator. From PMS/CRS: export room-night level revenue and inventory, aggregate by date then divide. Reconcile both: small timing differences (checkouts vs posting) and non-room credits must be normalized.
Exclude out-of-service rooms from the available-rooms denominator for dates they were not sellable (use “rooms available for sale”). When room count changes mid-period, use the actual daily available room count (e.g., 100 rooms for 15 days and 90 rooms for 15 days => denominator = 100×15 + 90×15). Clearly document temporary closures, because including non‑sellable rooms falsely depresses RevPAR.
ADR = Rooms Revenue ÷ Rooms Sold. ADR measures price per occupied room; it says nothing about volume. RevPAR blends ADR and occupancy — use ADR to assess price strategy, RevPAR to assess overall room-level revenue performance.
Occupancy = Rooms Sold ÷ Rooms Available. Occupancy shows demand/volume. A property can have high occupancy and low ADR (low RevPAR) if rates are discounted, or high ADR and low occupancy if pricing is too aggressive. Both metrics are needed to diagnose performance.
GOPPAR (Gross Operating Profit Per Available Room) adjusts for costs and is essential for profitability analysis. TRevPAR (Total Revenue Per Available Room) includes non‑room revenue (F&B, spa). Use RevPAR for room-revenue efficiency; use GOPPAR/TRevPAR when assessing profit or full-property revenue generation.
RevPAR Index = Property RevPAR ÷ Competitive Set RevPAR. An RPI >1 means the property outperforms its comp set. It’s the standard benchmarking tool for market share and pricing effectiveness.
If ADR rises but RevPAR falls, occupancy likely dropped enough to offset rate gains. Possible causes: losing rate-sensitive segments, overpricing vs comp set, group cancellations, or distribution shifts that reduce volume.
Occupancy growth with falling RevPAR signals discounting, heavy low‑rate channel mix, or lower-quality demand (e.g., transient leisure replacing corporate). Check channel and segment mix to identify if gains are revenue‑accretive or margin‑diluting.
Seasonality and discrete events (conventions, sports) produce short-term RevPAR spikes. Use T12 or comparable-month analyses to separate structural trends from one-offs.
Segment RevPAR by booking channel, market segment (corporate, group, transient), length-of-stay, and length of booking lead time. That breakdown shows whether changes are driven by pricing, distribution, cancellations or mix shifts.
Select hotels that share location, quality, scale and distribution. Avoid mixing different classes (luxury vs economy) and adjust for chain scales and proximity. Re-evaluate comp sets when your product or target market changes.
STR is the industry standard for hotel benchmarking. Large brokerages (CBRE, HVS) and STR Global provide market reports. For short-term rentals, AirDNA and OTA analytics offer RevPAR-like insights. Cross-check multiple sources to validate numbers.
RPI vs market average is the primary delta measure. Segment-level benchmarks (e.g., luxury vs economy) give context—what’s “good” differs by segment and market.
Beware of inconsistent definitions (out-of-service rooms included vs excluded), mismatched periods, and small sample sizes. Ask vendors for methodology, confirm room counts and verify major events or renovations in the period.
Underwriters translate RevPAR expectations into room revenue forecasts, then subtract operating expenses to estimate NOI. Use scenario-based RevPAR (base, upside, downside) tied to market assumptions.
Since hotel valuations rely on stabilized NOI, a change in RevPAR maps directly to revenue and NOI sensitivity and thus to value at a given cap rate. Small percentage moves in RevPAR can materially affect valuation in high-leverage deals.
Normalize for one-offs (major events, litigation settlements), separate transient and contracted/group business, and adjust for management-fee structures that affect owner NOI. Model contract roll-outs or expirations explicitly.
Lenders want stable, market-supported RevPAR and evidence of demand. Appraisers focus on historical RevPAR, comp-set trend, and reasonableness of future RevPAR assumptions. Document sources and sensitivity tests.
RevPAR measures revenue per room but not costs; high RevPAR doesn’t guarantee high margins. GOPPAR or NOI analysis is required to assess true owner returns.
Packages that bundle F&B or extras can inflate ADR or hide true room rate. Large group bookings or heavily discounted OTA bulk sales can distort RevPAR unless segmented. Use TRevPAR to see whole-property revenue.
Reconciling: match date conventions, ensure out-of-service rooms are consistently handled, and reconcile posting differences (PMS vs accounting). Reconcile a sample of days across systems to detect systemic biases.
Properties with long-stay serviced apartments, mixed-use income streams, or significant non-room revenue rely less on RevPAR; use metrics that capture contract revenue and total revenue per key unit instead.
Use demand forecasts and RMS engines to dynamically set rates and manage minimum stay rules to capture highest-yield nights.
Optimize channel mix to increase net ADR (direct bookings lower commission). Use targeted promotions to shift profitable volume to direct channels.
Prioritize higher-margin segments, manage group pickup vs transient inventory, and customize packages that protect ADR while adding ancillary revenue.
Implement upsells (room upgrades, breakfast, late check-out) and invest in product features that justify higher rates—these raise ADR and RevPAR without necessarily increasing occupancy.
Discounting to drive occupancy can hurt GOPPAR. Model the margin impact of discount promotions and prefer strategies that grow net revenue per available room, not just top-line occupancy.
Primary property tools: PMS for transaction-level revenue, CRS for distribution, RMS for pricing decisions, and BI dashboards for KPI tracking. Ensure data pipelines reconcile between systems.
STR for hotel markets, CBRE/HVS for transactional intelligence, and AirDNA for short-term rental RevPAR analogs. Combine market data with your property-level analytics for actionable insights.
Always monitor ADR, Occupancy, GOPPAR, TRevPAR and RevPAR Index together — each provides context to interpret RevPAR moves.
Seaside Inn: 80 rooms. Baseline Month = 30 days. Baseline ADR = $140. Baseline Occupancy = 70%.
Interpretation: Solid baseline; use as comparison for tactical changes.
Effect: RevPAR rose from $98 to $100 (+2.04%) despite lower ADR — promotion drove incremental revenue. Check GOPPAR: commissions or incremental costs may reduce margin; promotion may not be sustainable long-term.
Effect: RevPAR increased materially (+7.55% vs baseline). Because ADR rose with minimal occupancy decline, NOI should improve and valuation support increases—assuming corporate rates have similar cost profiles.
No. ADR measures price per occupied room; RevPAR measures room revenue per available room (ADR×occupancy). Use ADR to optimize pricing and RevPAR to assess overall room revenue efficiency.
Exclude out‑of‑service rooms from available rooms for dates they can’t be sold. Including them artificially depresses RevPAR and misrepresents performance.
Yes as an analog (revenue per available unit-night), but adjust for differing booking patterns, minimum stays and ancillary revenue; AirDNA provides STR-specific benchmarks.
“Good” is relative to comp set and segment. Luxury markets have higher RevPAR than economy. Use RevPAR Index (>1 indicates outperformance) and STR segment averages for your market.
Align definitions (out-of-service rooms, posted revenue timing), reconcile sample days, and adjust for packages or non-room charges. Reconcile PMS exports to accounting totals and vendor-provided STR exports.
Vendors: STR, CBRE, HVS, AirDNA (STR-like STR for short-term rentals). Download a sample RevPAR calculation Excel template: Download RevPAR Excel template.
Explore revenue management courses, STR market reports, and vendor trainings for PMS/RMS. Practice by reconciling PMS exports and building RevPAR-to-NOI sensitivity models.
RevPAR = Revenue Per Available Room (ADR×Occupancy) and is a primary indicator of room-revenue efficiency. It’s vital for benchmarking, underwriting and revenue management but must be paired with GOPPAR and segmentation to understand profitability and drivers.
