Quick answer
RevPAR (Revenue Per Available Room) is the KPI that captures, in a single number, how well your hotel performs. You can calculate it two equivalent ways: room revenue ÷ available rooms, or ADR × occupancy rate. If on a given night you take in 8,000 € across 100 available rooms, RevPAR is 80 €. Unlike ADR, it also accounts for the rooms that stayed empty — which is why it's the most reliable indicator of whether your pricing and occupancy strategy is working.
What RevPAR means
RevPAR stands for Revenue Per Available Room. The key word is available: the denominator is not the rooms you sold, but every room you had on offer — empty ones included.
That makes it different — and stricter — than other indicators. You can have very high rates, but if half the hotel sits empty, RevPAR says so immediately. And you can be full every night, but if you're giving rooms away, that shows up too.
RevPAR answers one blunt question: how much average revenue does each room I own generate, whether or not it was sold?
The two RevPAR formulas
There are two formulas, and they always return the same result.
Formula 1 — from revenue
RevPAR = total room revenue ÷ number of available rooms
Example: a 100-room hotel takes in 8,000 € of room-only revenue on one night (excluding restaurant, spa, extras).
RevPAR = 8,000 ÷ 100 = 80 €
Formula 2 — from ADR and occupancy
RevPAR = ADR × occupancy rate
The same hotel sold 80 rooms at an average rate (ADR) of 100 €. Occupancy is 80/100 = 80%.
RevPAR = 100 € × 0.80 = 80 €
Same number. The second formula is more useful because it breaks RevPAR down into its two engines: rate and occupancy. When RevPAR falls, it's almost always one of the two that gave way.
To run all three figures together — ADR, occupancy and RevPAR — from revenue and rooms, use the RevPAR and ADR calculator.
RevPAR, ADR and occupancy: how they talk to each other
These three KPIs are linked but measure different things:
| KPI | What it measures | Formula | |---|---|---| | ADR | Average revenue per sold room | room revenue ÷ rooms sold | | Occupancy | % of rooms sold out of the total | rooms sold ÷ available rooms | | RevPAR | Average revenue per available room | ADR × occupancy |
The crux: ADR and occupancy pull in opposite directions. To lift occupancy you tend to drop rates; to lift ADR you tend to lose occupancy. RevPAR is the referee that says which combination produces more total revenue.
Choosing between two scenarios
- Scenario A: ADR 120 €, occupancy 65% → RevPAR = 78 €
- Scenario B: ADR 95 €, occupancy 88% → RevPAR = 83.60 €
Scenario B has lower rates but generates more revenue per available room. On RevPAR alone, B wins. But — careful — more rooms sold means more variable cost: we'll see that with GOPPAR.
What counts as a "good" RevPAR
There's no universal number. A luxury boutique in Florence and a 3-star on the outskirts live on completely different scales. RevPAR is always judged against three references:
- History — RevPAR for the same period last year. Seasonality is huge in hospitality: compare June with June, not June with February.
- Budget — what you set out to achieve at the start of the year.
- Comp set — the group of comparable competing hotels. Indices like the MPI (Market Penetration Index) measure your market share precisely on RevPAR.
RevPAR rising year over year at equal seasonality is the sign your strategy is working. The absolute value, on its own, says little.
Concrete levers to raise RevPAR
Because RevPAR = ADR × occupancy, you have exactly two families of levers.
Levers on ADR (rate)
- Dynamic pricing: adjust rates in real time to demand, seasonality, day of week and city events. It's now a standard, not a luxury.
- Segmentation: business travellers pay for flexibility, leisure guests respond to packages. Different rates for different segments.
- Upselling: superior rooms, late check-out, breakfast included. They lift ADR without touching occupancy.
- Cutting OTA commissions: every direct booking is worth more. Pushing the direct channel improves net ADR.
Levers on occupancy
- Fill the weak nights: midweek packages, non-refundable rates, weekend minimum stays.
- Length-of-stay management: it often pays to "lose" a one-night booking to protect a three-night stay.
- Direct marketing: emails to past guests, a loyalty programme, well-managed reviews.
The recommended room rate — starting from cost per occupied room (CPOR) and including OTA commissions and expected RevPAR — is set with the room rate calculator.
The most common mistake: chasing occupancy
The instinctive reflex when the hotel is empty is to cut prices to fill it. Sometimes that's right, often it isn't.
Every extra room sold brings revenue but also variable costs: cleaning, linen, breakfast, utilities, wear-and-tear depreciation. Drop the rate too far and you risk selling rooms that cost you nearly as much as they earn.
RevPAR tells you whether you're making more revenue. But to know whether you're making more profit, you need the next step.
From RevPAR to GOPPAR: the real goal
RevPAR has a limit: it ignores costs. Two hotels with the same 80 € RevPAR can have opposite profitability if one carries far higher operating costs.
That's why mature revenue management looks at GOPPAR (Gross Operating Profit Per Available Room): the gross operating profit per available room, not revenue.
GOPPAR = gross operating profit ÷ available rooms
GOPPAR rewards choices that lift margin, not just turnover. A promotion that fills the hotel but erodes costs can improve RevPAR and worsen GOPPAR: that's where you see who really manages well.
To compute GOP, operating margin and GOPPAR from revenue and costs, use the GOPPAR calculator. And to understand what an occupied room actually costs you — the basis of every pricing decision — the cost per occupied room calculator.
Quick RevPAR checklist
Keep these points in check every week:
- [ ] RevPAR computed on room revenue only, not total hotel revenue
- [ ] Year-over-year comparison at equal seasonality, not month over month
- [ ] RevPAR broken into ADR and occupancy to see where a drop comes from
- [ ] Comp set monitored (are you above or below the market?)
- [ ] Every promotion judged on GOPPAR too, not RevPAR alone
- [ ] Direct channel pushed to improve ADR net of commissions
Once you understand RevPAR, you have the compass. But remember: it's the starting point of revenue management, not the finish line. The finish line is profit per room.
Related resources
- RevPAR and ADR calculator — the three KPIs at once
- GOPPAR calculator — from revenue to profit per room
- Cost per occupied room calculator — the basis of every rate
- Room rate calculator — cost-plus pricing with OTA commissions