How to Calculate Revenue per Available Room

RevPAR Calculator

Your RevPAR will appear here.

function calculateRevPAR() { var adr = parseFloat(document.getElementById('adrInput').value); var occupancyRate = parseFloat(document.getElementById('occupancyRateInput').value); var resultDiv = document.getElementById('revparResult'); if (isNaN(adr) || isNaN(occupancyRate) || adr < 0 || occupancyRate 100) { resultDiv.innerHTML = "Please enter valid positive numbers for ADR and an occupancy rate between 0 and 100."; resultDiv.style.backgroundColor = '#f8d7da'; resultDiv.style.color = '#721c24'; return; } var revpar = adr * (occupancyRate / 100); resultDiv.innerHTML = "Your RevPAR is: $" + revpar.toFixed(2) + ""; resultDiv.style.backgroundColor = '#d4edda'; resultDiv.style.color = '#155724'; }

Revenue Per Available Room, commonly known as RevPAR, is a crucial metric in the hospitality industry. It provides a snapshot of a hotel's financial performance by combining both room rates and occupancy levels. Unlike other metrics that might focus solely on how much a room sells for (like Average Daily Rate – ADR) or how many rooms are sold (Occupancy Rate), RevPAR offers a holistic view of revenue generation efficiency.

What is RevPAR?

RevPAR is a key performance indicator (KPI) that measures the revenue generated per available room in a hotel over a specific period. It helps hotel owners, managers, and investors understand how effectively they are filling their rooms and at what price point, ultimately indicating the property's ability to generate revenue from its existing inventory.

Why is RevPAR Important?

• Performance Benchmarking: RevPAR allows hotels to compare their performance against competitors, market averages, and their own historical data.
• Pricing Strategy: A low RevPAR might indicate a need to adjust pricing strategies or improve marketing efforts to boost occupancy. A high RevPAR suggests effective pricing and strong demand.
• Operational Efficiency: It helps assess the efficiency of sales, marketing, and revenue management teams in maximizing room revenue.
• Investment Decisions: For potential investors, RevPAR is a critical factor in evaluating the profitability and potential return on investment of a hotel property.
• Forecasting: By tracking RevPAR trends, hotels can make more accurate forecasts for future revenue and adjust operational plans accordingly.

How is RevPAR Calculated?

There are two primary ways to calculate RevPAR, both yielding the same result:

1. Method 1: Using Total Room Revenue and Total Available Rooms

   RevPAR = Total Room Revenue / Total Number of Available Rooms

   This method is straightforward. You take all the revenue generated from room sales over a period (e.g., a day, a month, a year) and divide it by the total number of rooms available for sale during that same period, regardless of whether they were occupied or not.

   Example: A hotel has 100 available rooms. In one day, it generated $15,000 in room revenue.
   RevPAR = $15,000 / 100 = $150.00

2. Method 2: Using Average Daily Rate (ADR) and Occupancy Rate

   RevPAR = Average Daily Rate (ADR) × Occupancy Rate

   This method breaks down RevPAR into its two core components. ADR is the average price paid per occupied room, and Occupancy Rate is the percentage of available rooms that were sold.

   Example: A hotel's ADR is $200, and its Occupancy Rate is 75% (or 0.75).
   RevPAR = $200 × 0.75 = $150.00

How to Use the RevPAR Calculator

Our RevPAR calculator uses the second, more analytical method, allowing you to see how changes in your average room rate or occupancy directly impact your overall revenue per available room.

1. Enter Average Daily Rate (ADR): Input the average revenue you earn per occupied room. This is typically calculated as Total Room Revenue / Number of Rooms Sold. For example, if your average room rate is $150, enter '150'.
2. Enter Occupancy Rate (%): Input the percentage of your available rooms that are occupied. For example, if 75% of your rooms are sold, enter '75'.
3. Click "Calculate RevPAR": The calculator will instantly display your RevPAR.

Realistic Examples:

• Boutique Hotel: ADR = $250, Occupancy Rate = 60%.
  RevPAR = $250 * 0.60 = $150.00
• Budget Hotel: ADR = $80, Occupancy Rate = 85%.
  RevPAR = $80 * 0.85 = $68.00
• Luxury Resort: ADR = $400, Occupancy Rate = 70%.
  RevPAR = $400 * 0.70 = $280.00

Limitations of RevPAR

While incredibly useful, RevPAR does have limitations:

• Excludes Other Revenue: RevPAR only considers room revenue. It does not account for revenue generated from food and beverage, spa services, meeting rooms, or other ancillary services. For a more complete picture, metrics like TRevPAR (Total Revenue Per Available Room) are used.
• Doesn't Account for Costs: RevPAR is a top-line revenue metric and does not factor in operational costs. A high RevPAR doesn't automatically mean high profitability if operating expenses are also very high.

Despite these limitations, RevPAR remains an indispensable tool for hoteliers to gauge their core business performance and make informed strategic decisions regarding pricing, marketing, and inventory management.