Hospitality glossary · Money and margin
RevPAR, or revenue per available room, is rooms revenue divided by the total number of rooms available to sell, which can also be calculated as average daily rate multiplied by occupancy.
In practice
Definitions are easy. What matters is how the thing behaves in a real operation, and where it tends to go wrong.
It is the standard comparison figure in hotels because it combines the two things a revenue manager trades against each other. A property can raise rate and lose occupancy, or fill every room by discounting, and either move can leave RevPAR flat while changing the business underneath it completely. Divide the denominator by rooms available rather than rooms sold, and keep out-of-order rooms in the count or the number flatters you.
Managing to RevPAR alone. It says nothing about what those rooms cost to service, and occupancy bought with deep discounting brings housekeeping hours, laundry, breakfast covers and wear with it. A site can grow RevPAR and shrink profit, which is why most operators now watch profit per available room alongside it.
Questions
Something here that doesn’t match what you’re seeing in your own business? That is usually worth a conversation rather than another article.
RevPAR, or revenue per available room, is rooms revenue divided by the total number of rooms available to sell, which can also be calculated as average daily rate multiplied by occupancy. It is the standard comparison figure in hotels because it combines the two things a revenue manager trades against each other. A property can raise rate and lose occupancy, or fill every room by discounting, and either move can leave RevPAR flat while changing the business underneath it completely. Divide the denominator by rooms available rather than rooms sold, and keep out-of-order rooms in the count or the number flatters you.
Managing to RevPAR alone. It says nothing about what those rooms cost to service, and occupancy bought with deep discounting brings housekeeping hours, laundry, breakfast covers and wear with it. A site can grow RevPAR and shrink profit, which is why most operators now watch profit per available room alongside it.
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