RevPAR (Revenue Per Available Room) is your room revenue divided by the rooms you had available — not the rooms you sold. It puts occupancy and rate into one number, and that is why it is one of the most used performance measures in hotels everywhere. You only have to read it correctly, because it has blind spots too.
The definition — and its two formulas
RevPAR answers one question: how much revenue does each room I have bring in, whether it was sold or not? There are two ways to calculate it, and they give the same result:
RevPAR = ADR × Occupancy
The second formula shows what RevPAR really is: the point where your rate (ADR) meets how full you are (occupancy). It goes up only when at least one of the two improves — without the other falling by the same amount.
How to calculate it — an example in euros
Take a hotel with 47 rooms and one month of the season:
Occupancy 70% → sold: 987 rooms
Average rate (ADR): €86
Room revenue: 987 × 86 = €84,882
RevPAR = 84,882 ÷ 1,410 = €60.20
(check: €86 × 70% = €60.20 ✓)
Did you know? RevPAR changes every night, and one mistake in the available rooms turns it upside down. WisDom RM calculates RevPAR, ADR and occupancy automatically every night, and the Morning Report shows them next to the same time last year — no manual spreadsheet.
Try it free for 14 days →Notice the difference from ADR. ADR (€86) counts only the rooms that were sold. RevPAR (€60.20) also charges the 423 empty rooms to the result — which is why it is the more honest mirror of how the whole hotel performed.
Why it is better than occupancy or ADR on their own
Because it protects you from the two classic illusions. Look at two strategies for the same month:
B: “Hold the rate” — occupancy 70% × ADR €70 = RevPAR €49
Strategy A keeps the hotel busy — and earns less. The picture gets worse once you remember costs: the about nine extra occupied rooms of strategy A every night each carry their own variable cost — cleaning, linen, breakfast. More work for the team, less revenue, even less profit. And if you judge the same choice by profit instead of revenue, the answer can change once more.
What RevPAR does not tell you
Every measure is defined by its limits as well. RevPAR:
- Does not see costs. A high RevPAR built on expensive OTA commissions, or on costs that got out of hand, can hide worse profit than a modest one. That is why you always read it next to CPOR.
- Does not see revenue outside the rooms. Restaurant, bar and spa do not count — that is what TRevPAR (Total RevPAR) is for.
- Does not see the channel. €100 booked direct and €100 through an OTA with 20% commission give the same RevPAR — but not the same cash.
- Does not see the guest experience. A full night with record RevPAR can be the night that costs you in reviews two weeks later.
- Does not see the market. A RevPAR of €60.20 can be excellent or average — it depends on what the hotels around you did. Your position against them is measured by a different index, ARI.
RevPAR in a seasonal hotel
Two points that textbooks written for year-round city hotels often leave out:
Available means only the nights you are open
If you open in May and close in October, your available rooms for the year are 47 × ~184 nights — not 47 × 365. Count the closed months too and your annual RevPAR comes out artificially at about half, and it compares with nothing. The same goes for rooms out of order during a renovation.
Compare with the same month last year — never with the month before
“July went better than June” says nothing: July always goes better than June. The question that counts is how this July did against last July — same season, same market, a real trend.
Conclusion
RevPAR is the most honest single number for how your rooms perform: neither a busy reception nor a high rate in the system can fool it. Together with CPOR it makes the revenue–cost pair, and the point where that pair balances — how much occupancy and what rate you need to cover your costs — is your break-even. And when RevPAR falls, the next question is which of the two pulled it down: see how to calculate ADR correctly.
Mathematician with studies in hospitality management and years of night shifts in hotels. WisDom RM — and this blog — were born on the night shift.
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