Hotel & Hospitality
Available room-nights = Rooms available x Nights ADR (Average Daily Rate) = Room revenue / Rooms sold Occupancy % = Rooms sold / Available room-nights x 100 RevPAR (Rev. Per Avail. Room)= Room revenue / Available room-nights Cross-check: RevPAR = ADR x Occupancy %
RevPAR (Revenue Per Available Room) measures how much revenue each available room generates, regardless of whether it was sold. It is calculated as total room revenue divided by the number of available room-nights (rooms available multiplied by the number of nights in the period). RevPAR is the single most important top-line KPI in hotel revenue management because it combines both rate and occupancy into one figure. You can also verify it as ADR multiplied by Occupancy.
ADR (Average Daily Rate) is the average price of the rooms you actually sold: room revenue divided by rooms sold. RevPAR (Revenue Per Available Room) spreads that revenue across every room you had available, sold or not. ADR tells you about pricing; RevPAR tells you about overall room-revenue performance. A hotel can have a high ADR but a poor RevPAR if occupancy is low.
Occupancy rate is the percentage of available rooms that were sold over a period: rooms sold divided by available room-nights (rooms available times the number of nights), expressed as a percentage. For example, 1,050 rooms sold against 50 rooms over 30 nights (1,500 room-nights) gives an occupancy of 70%.
Because RevPAR = ADR x Occupancy, both levers increase it, but they are not equal in profit terms. Raising ADR flows almost entirely to the bottom line because the room is already staffed and serviced. Raising occupancy adds the variable cost of each additional occupied room (the CPOR: housekeeping, amenities, laundry, utilities). When demand allows, increasing rate is usually the more profitable route, which is why revenue managers protect ADR before discounting.
There is no universal benchmark because RevPAR depends heavily on location, star rating, season and market segment. The right way to use it is comparatively: track your own RevPAR over time, compare it against the same period last year, and benchmark against your competitive set (your RevPAR Index or RGI). A rising RevPAR with stable costs means improving room profitability.
No. Because RevPAR = ADR x Occupancy and occupancy can never exceed 100%, RevPAR is always less than or equal to ADR. RevPAR only equals ADR in the theoretical case of 100% occupancy. If your calculation ever shows RevPAR above ADR, the inputs are wrong (most often rooms sold exceeds the available room-nights).