What is Revenue per Available Room (RevPAR)? A Practical Guide for Hotel Owners

When you hear hotel investors, operators, or lenders talk about “performance,” there’s one metric that always comes up: Revenue per Available Room (RevPAR). It’s not just another acronym—it’s the industry’s gold standard for measuring how well a hotel is balancing occupancy and room rates.

In this guide, we’ll break down what RevPAR is, how to calculate it, why it matters, and how to actually use it to make better decisions for your hotel.

How to Calculate RevPAR

There are two ways to calculate RevPAR, and both give you the same result:

• RevPAR = Total Room Revenue ÷ Total Rooms Available

• RevPAR = ADR × Occupancy %

Example 1:
A 150-room hotel makes $15,000 in room revenue in one night.
RevPAR = $15,000 ÷ 150 = $100

Example 2:
A 30-room hotel generates CNY 6,000 in one night.
RevPAR = 6,000 ÷ 30 = 200

The beauty of RevPAR is that it accounts for both occupancy and rate, giving you a more complete snapshot than looking at ADR (average daily rate) or occupancy alone.

ADR vs RevPAR

ADR tells you the average price paid per room sold. RevPAR, on the other hand, looks at all rooms available—sold or unsold.

That means you could have a strong ADR but weak RevPAR if you’re leaving too many rooms empty. Conversely, you could have high occupancy but low ADR, which also pulls RevPAR down.

Think of ADR as the price tag, and RevPAR as the bottom line impact of how many people actually bought.

Why RevPAR Matters

For hotel owners and operators, RevPAR works like a quick health check of your room business. It answers key questions like:

• Am I filling rooms at a healthy rate, or discounting too much?

• Am I capturing enough demand during high season compared to my competitors?

• Where am I underperforming: occupancy, ADR, or both?

Because room sales typically generate the highest profit margins in a hotel, tracking RevPAR over time helps you spot when to adjust pricing, distribution, or marketing strategies.

What is a Good RevPAR?

There’s no universal “good” number—it depends on your property type, market, and comp set. What matters is:

• RevPAR % change: Is your RevPAR improving compared to last year?

• RevPAR Index (RGI): How does your RevPAR stack up against your competitors? A score of 100 means you’re on par; above 100 means you’re outperforming your comp set.

Example:

• A luxury hotel with a comp set of other high-end properties should aim above 100.

• An economy hotel competing with midscale properties might be satisfied below 100 if it’s still capturing the right segment profitably.

Beyond RevPAR: Other Metrics to Watch

• TRevPAR (Total Revenue per Available Room): Includes all revenue, not just rooms (F&B, spa, parking, etc.).

• GOPPAR (Gross Operating Profit per Available Room): Goes even further by factoring in expenses, making it a closer link to actual profitability.

These metrics complement RevPAR and give you a fuller picture of how well you’re monetizing the property.

The Bottom Line

RevPAR is not just a number—it’s a tool. By tracking it alongside ADR, occupancy, and indexes like RGI, you can see how effectively you’re capturing demand and where to improve. Combine RevPAR with smarter forecasting, direct booking strategies, and cost control, and it becomes one of the most powerful levers for boosting both revenue and valuation.

For a deeper dive, check out these resources:

• RevPAR Needed to Break Even

• Hotel Pricing Strategies