Revenue per Available Room (RevPAR)
Candlefocus EditorRevPAR is calculated by taking the total guestroom revenue generated in a given time period and dividing it by the number of rooms available during that same time period. It is also calculated by multiplying the average Daily Rate (ADR) by the occupancy rate expressed as a percentage. A higher RevPAR indicates an increase in profitability as hoteliers are able to fill rooms more effectively.
When managing a hotel or resort, RevPAR is an important metric to track as it reflects the overall performance of the property. It gives a good indication of the trends within the hospitality industry. If the RevPAR of a hotel rises each month for six months, it is a sign that people are spending more money on lodging and that the hotel is performing better than it was in the past. A decline on the other hand, would indicate that less people are staying at the hotel or that the average rate of per stay is lower.
Hoteliers also use RevPAR to determine how a certain property is performing in comparison to other similar hotels. With RevPAR, a hotelier can compare the rate at which its occupancy rate compared to the rest of the market. This gives a good indication of whether more aggressive marketing tactics may need to be used in order to attract more customers.
Overall, RevPAR is an important performance measure used in the hospitality industry. While it is an important metric to track, increasing RevPAR is not necessarily indicative of an increase in profits. Therefore it is important to use other metrics such as occupancy rate and average daily rate in order to assess the overall profitability and performance of a hotel.