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Revenue Management Glossary

Revenue per Available Room (RevPAR)

Definition

Revenue per Available Room (RevPAR) is a revenue management metric that measures the total revenue earned per available room during a set period of time. This metric only examines room revenue and does not all include non-room sources of revenue (i.e., food & beverage, amenities, etc.).

How to use it

Along with ADR and occupancy, RevPAR is one of the most important revenue management metrics for hoteliers. RevPAR measures a hotel's ability to fill its available rooms and demonstrates how well the property is balancing occupancy and pricing to maximize revenue.

Formula

There are two ways to calculate RevPAR. The first way is to divide the total room revenue (during a set period of the time), by the total number of available rooms (during the same time period).

RevPAR= Total room revenue / Total number of available rooms

The second way to calculate RevPAR is to multiply your ADR (during the set period of time) by your occupancy (during the same time period).

RevPAR=ADR x Occupancy

Related Terms

RevPOR (Revenue per Occupied Room), ADR, Occupancy, Revenue Management Metrics, Revenue Management, Revenue Manager, TRevPAR, RevPAG, GOPPAR
Hoteliers should monitor their RevPAR on a regular basis (as well as their other key metrics) to ensure that they are always pricing their rooms at the right price based on the current supply and demand in their destination. For example, when there is high demand but the property has a low occupancy rate, it likely means that they are pricing their rooms too high for the market to bear; by decreasing their room rates to be more in line with the competition, they will likely see their occupancy rates increase quickly. The opposite is also true: if there is very low demand but the property has high occupancy, the room rates are likely too low and should be increased to maximize revenue from each booking.

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