What is RevPAR?
RevPAR = Revenue Per Available Room
The most important metric in hotel revenue management. It measures how well you're filling rooms AND at what price.
RevPAR Formula
There are two ways to calculate RevPAR:
RevPAR = Total Room Revenue ÷ Total Available Rooms
Or alternatively:
RevPAR = ADR × Occupancy Rate
Both formulas give you the same result. Use whichever is easier based on the data you have.
RevPAR Calculation Example
Example: 50-Room Hotel in Jaipur
Total Rooms50
Rooms Sold Tonight35
ADR (Average Rate)₹4,000
Total Room Revenue₹1,40,000
Occupancy70%
RevPAR₹2,800
Calculation: ₹1,40,000 ÷ 50 rooms = ₹2,800 RevPAR
Or: ₹4,000 ADR × 70% occupancy = ₹2,800 RevPAR
Why RevPAR Matters
RevPAR is better than looking at occupancy or ADR alone because:
- High occupancy at low rates = Low RevPAR (not good)
- High rates with low occupancy = Low RevPAR (not good)
- Balanced occupancy and rates = High RevPAR (ideal)
Key Insight: A hotel with 60% occupancy at ₹5,000 ADR (RevPAR ₹3,000) performs better than a hotel with 90% occupancy at ₹3,000 ADR (RevPAR ₹2,700).
Where RevPAR is Used
| Use Case | How RevPAR Helps |
|---|---|
| Performance Tracking | Compare today vs last month, or this year vs last year |
| Competitor Analysis | Benchmark against similar hotels in your market |
| Pricing Decisions | See if rate changes are improving overall revenue |
| Investor Reports | Standard metric that investors and owners expect |
| Staff Incentives | Tie bonuses to RevPAR growth, not just occupancy |
RevPAR vs Other Metrics
| Metric | What It Measures | Limitation |
|---|---|---|
| RevPAR | Revenue efficiency per available room | Doesn't include non-room revenue |
| ADR | Average rate of sold rooms only | Ignores unsold rooms |
| Occupancy | Percentage of rooms sold | Ignores pricing |
| TRevPAR | Total revenue per available room | More complex to calculate |
How to Improve RevPAR
- Dynamic Pricing: Raise rates during high demand, lower during low demand
- Length of Stay Controls: Use MLOS during peak periods
- Channel Mix: Reduce OTA dependency, increase direct bookings
- Upselling: Upgrade guests to higher room categories
- Demand Forecasting: Predict busy periods and price accordingly
Pro Tip: Track RevPAR daily, weekly, and monthly. Compare same day last week, same day last year. Look for patterns to optimize your pricing strategy.
Good RevPAR Benchmarks (India)
| Hotel Type | Typical RevPAR Range |
|---|---|
| Budget Hotels | ₹800 - ₹1,500 |
| Mid-Scale Hotels | ₹1,500 - ₹3,500 |
| Upscale Hotels | ₹3,500 - ₹7,000 |
| Luxury Hotels | ₹7,000 - ₹15,000+ |
Note: RevPAR varies significantly by location, season, and market conditions.