RevPAR Calculator

What is RevPAR (Revenue Per Available Room)?

RevPAR, or Revenue Per Available Room, is a key performance indicator (KPI) widely used in the hospitality industry to measure a hotel's financial performance. It indicates how much revenue a hotel generates per available room, whether or not those rooms are occupied.

Unlike other metrics that focus solely on occupancy rates or average daily rates (ADR), RevPAR combines both, offering a more comprehensive view of how efficiently a hotel is filling its rooms and at what price. A higher RevPAR generally signifies better revenue management and operational efficiency.

It is a critical metric for hotel owners, general managers, revenue managers, and investors to assess profitability, compare performance against competitors (competitive set), and make strategic pricing and marketing decisions.

The Formula for RevPAR

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

RevPAR = Total Room Revenue ÷ Total Available Rooms

Alternatively:

RevPAR = Average Daily Rate (ADR) × Occupancy Rate (%)

Where:

• **Total Room Revenue:** The total income generated from selling guest rooms over a specific period (e.g., day, week, month, year). This excludes revenue from other hotel services like F&B, spa, etc.
• **Total Available Rooms:** The total number of rooms in the hotel multiplied by the number of days in the period. For a single day, it's just the total number of rooms.
• **Average Daily Rate (ADR):** The average revenue earned per occupied room ($). Calculated as (Total Room Revenue ÷ Total Occupied Rooms).
• **Occupancy Rate (%):** The percentage of available rooms that were sold. Calculated as (Total Occupied Rooms ÷ Total Available Rooms) × 100.

This calculator focuses on the first and most direct method: **Total Room Revenue / Total Available Rooms**.

How to Use This RevPAR Calculator

To determine your hotel's RevPAR:

1. **Total Room Revenue ($):** Enter the total revenue your hotel earned specifically from room sales over a chosen period (e.g., a day, a month).
2. **Total Available Rooms:** Enter the total number of rooms that were available for sale during that *exact same period*. If calculating for a month with 100 rooms, and all rooms were available every day, this would be 100 rooms * 30 days = 3000 available room nights.
3. **Click "Calculate RevPAR":** The calculator will instantly display your RevPAR.

Ensure that the period used for "Total Room Revenue" matches the period for "Total Available Rooms" for an accurate calculation.

Interpreting Your RevPAR

A higher RevPAR indicates better performance. Here's what different RevPAR values can suggest:

• **Increasing RevPAR:** Your hotel is either increasing its average daily rate (ADR), its occupancy, or both. This is a positive trend.
• **Decreasing RevPAR:** Your hotel might be struggling with low occupancy, decreasing ADRs, or a combination of both. This signals a need for strategic review.
• **Comparing to Competitors:** RevPAR is most powerful when compared against your competitive set (other similar hotels in your market). It helps you understand your market share and pricing power.
• **Impact of Pricing and Occupancy:**
  • High Occupancy + High ADR = Excellent RevPAR
  • High Occupancy + Low ADR = Moderate RevPAR (filling rooms but perhaps too cheaply)
  • Low Occupancy + High ADR = Moderate RevPAR (getting good prices, but not enough rooms filled)
  • Low Occupancy + Low ADR = Poor RevPAR

RevPAR helps revenue managers find the optimal balance between pricing and occupancy to maximize total revenue.

Limitations of RevPAR

While an excellent metric, RevPAR does have limitations:

• **Doesn't Include Other Revenue Streams:** RevPAR only considers room revenue. It does not account for income from food & beverage, spa services, meeting spaces, or other ancillary services. For a total revenue view, look at TRevPAR (Total Revenue Per Available Room).
• **Doesn't Account for Costs:** RevPAR is a revenue metric, not a profit metric. A hotel could have a high RevPAR but low profitability if its operating costs are also very high. For profit, metrics like GOPPAR (Gross Operating Profit Per Available Room) are more appropriate.
• **Doesn't Differentiate Room Types:** It treats all rooms equally, even if some are suites that generate significantly more revenue than standard rooms.

Therefore, RevPAR should always be analyzed in conjunction with other financial and operational KPIs to get a complete picture of a hotel's health.

Frequently Asked Questions (FAQs)

Q: What is the difference between RevPAR and ADR?

A: ADR (Average Daily Rate) measures the average revenue generated *per occupied room*. RevPAR (Revenue Per Available Room) measures the average revenue generated *per available room*, including vacant rooms. RevPAR is a more comprehensive metric because it factors in both occupancy and pricing.

Q: Why is RevPAR important?

A: RevPAR is crucial because it provides a holistic view of a hotel's ability to fill its rooms and generate revenue from them. It's a single metric that helps evaluate overall revenue management strategy, compare performance to competitors, and make informed decisions about pricing and marketing.

Q: Does RevPAR include revenue from food and beverage?

A: No, RevPAR explicitly focuses on **room revenue only**. If you want a metric that includes all revenue sources (rooms, F&B, spa, etc.) per available room, you would look at TRevPAR (Total Revenue Per Available Room).

Q: What's considered a "good" RevPAR?

A: A "good" RevPAR is highly dependent on the hotel's market, location, star rating, and competitive set. What's excellent for a budget motel might be poor for a luxury resort. The most effective way to judge your RevPAR is by comparing it to your past performance, your budget, and the RevPAR of your direct competitors.

Optimize your hotel's revenue strategy with Toolivaa's free RevPAR Calculator, and discover more essential tools in our Business Calculators section.