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Revenue Management Glossary

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Definition

By calculating your RevPAR and taking into account your occupancy, you are creating a more balanced and truthful display of how well your business is doing.

How to use it

Used to analyze the performance of a hotel and to effectively be able to compare it against other hotels that use this metric

Formula

RevPAR = Average income per night ÷ Total number of rooms
OR
RevPAR = Average Daily Rate (ADR) x Occupancy Rate

Related Terms

I personally enjoy this metric when comparing different style of hotels. For example, if there’s a 30 room hotel with an ADR of 500€ and occupancies of 50% and a different hotel with 100 room hotel with an ADR of 300€ but with occupancies of 85%, their respective RevPARs are 250€ and 255€, making them perform at similar level despite the very different numbers.

José Miranda

Jose Miranda