What is RevPAR in the hotel industry

Definition

RevPAR (Revenue Per Available Room) is one of the most widely used metrics in hotel management because it captures both occupancy and average rate in a single figure. Unlike average rate, which only looks at what each guest pays, RevPAR shows how much every room in the hotel actually earns, whether it is sold or sitting empty.

Its strength is comparability: it lets you measure performance across periods, across properties of different sizes, and against your competitive set. A rising RevPAR signals that the hotel is striking a better balance between volume and price, while a drop is often the first warning that something is off in the commercial or distribution strategy.

RevPAR should always be read alongside ADR and occupancy, since two hotels can reach the same RevPAR through very different routes: one with high occupancy and a low rate, the other with a high rate and lower occupancy.

Worked example: a 50-room hotel with an ADR of USD 120 and 75% occupancy has a RevPAR of USD 90 (120 × 0.75). Seen the other way: if it sold 38 rooms that night, it generated about USD 4,560 in rooms revenue, which divided by the 50 available rooms also lands at roughly USD 90 per available room.

Formula

Both formulas give the same result. Example: with an ADR of USD 120 and 75% occupancy, RevPAR is 120 × 0.75 = USD 90. Available rooms means every room in inventory for the period, not just the ones sold.

Industry benchmark

RevPAR ranges vary widely by market and season; these figures are illustrative ranges by hotel type.

How to improve it

• Use dynamic revenue management to adjust rates based on demand, events and booking pace.
• Drive direct bookings: by avoiding the OTA commission your net ADR rises and, at the same occupancy, your net RevPAR improves. For example, moving a USD 120 reservation off an OTA with an 18% commission to the direct channel recovers about USD 22 per night that flows straight into your revenue per room.
• Respond quickly to every inquiry; a meaningful share of bookings is lost to slow replies.
• Segment rates and build packages that raise perceived value without cannibalizing occupancy.

Related terms