RevPAR (RevPAR)
In hotel revenue management, RevPAR (revenue per available room) is room revenue divided by the total number of rooms available, whether or not they sold.
It is the number that settles arguments. Rate and occupancy pull in opposite directions, and RevPAR is what tells you which of the two was worth more.
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What is RevPAR?
RevPAR measures how well a property converts its entire inventory into revenue. The denominator is every room you had, including the ones nobody booked. That is the whole point: empty rooms are a cost of the decision you made about price, and RevPAR is the only one of the three core metrics that makes you carry them.
There are two formulas and they give the same answer:
- Room revenue divided by rooms available
- ADR multiplied by occupancy rate
Rooms available means physical inventory, not what was loaded to a channel. If you took four rooms out for refurbishment, most conventions reduce the denominator accordingly, but be consistent and say which you used. A property that quietly drops rooms from the denominator during a closure can post a RevPAR improvement that is pure arithmetic.
Like ADR, RevPAR is room revenue only. Food, beverage, parking and spa sit outside it. TRevPAR is the version that includes them.
Resources: ADR · Occupancy rate · TRevPAR
How RevPAR works in practice
RevPAR earns its keep when two periods disagree about whether they went well.
Worked example. A 46-room inn runs October at 74 percent occupancy and $172 ADR: RevPAR is $127. November runs 61 percent at $198: RevPAR is $121. November had the better rate and the worse business, by about $6 per available room per night, or roughly $8,300 across the month.
That comparison is unavailable from either metric alone. October looked worse on rate. November looked worse on occupancy. Only RevPAR ranks them.
The same logic applies to a single decision. If you raise a Saturday from $180 to $210 and occupancy falls from 90 percent to 76 percent, RevPAR goes from $162 to $160. The rate rise was very slightly negative, and you serviced fewer rooms to get there, so in profit terms it may still have been the right call. RevPAR gets you to the honest starting point.
Where it misleads is across properties of different sizes or in a market with new supply. A hotel can grow revenue every year and watch RevPAR fall because three competitors opened. That is a market-share question, which is what RGI is for.
Resources: RGI · Dynamic pricing
Why RevPAR matters for independent hotels
Most independents run on occupancy instinct. A full hotel feels successful, an empty room feels like a failure, and the price it took to get there disappears from the story. RevPAR is the correction.
It is also the number your lender, your accountant and any future buyer will use, because it is the only common currency across properties of different sizes. A 25-room inn and a 120-room motel cannot be compared on revenue, and comparing them on occupancy is meaningless. RevPAR normalises both.
The practical value for a small property is that it stops the two most expensive habits at once: discounting a date that would have filled anyway, and holding a rate so high that a date empties. Both look defensible through one metric and obviously wrong through RevPAR.
Resources: Revenue management for independent hotels
How to use RevPAR at your property
- Calculate it the long way at least once. ADR times occupancy is quicker, but dividing revenue by available rooms forces you to confirm your room count and your revenue definition match.
- Decompose every change. When RevPAR moves, say immediately whether ADR or occupancy caused it. A RevPAR number with no decomposition is a headline, not an insight.
- Compare against the same period last year, not against last month. Seasonality will swamp everything else.
- Look at it by day of week. A property can have healthy weekend RevPAR and a midweek problem that the monthly figure buries.
- Track it against your comp set, not only against yourself. Growing RevPAR in a market growing faster is a loss.
- Do not optimise it in isolation. RevPAR ignores the cost of the business. See the limits below.
What RevPAR will not tell you
It has no view of cost. Two properties with identical RevPAR can have very different profits if one buys its occupancy through high-commission channels and the other sells direct. GOPPAR is the measure that closes that gap.
It ignores everything that is not a room. A property with strong food and beverage or a busy car park is systematically undervalued by RevPAR, which is what TRevPAR exists to fix.
And it is silent on market context. Falling RevPAR in a market falling faster is a good year. Rising RevPAR in a market rising faster is a bad one. RevPAR alone cannot tell those apart, and most operators discover this only when new supply opens nearby.
How ampliphi approaches RevPAR
Ampliphi's everyday rate suggestion is demand-based, built on booking pace and occupancy, which is the pair that produces RevPAR in the first place. The system reads how each future date is filling against its own history and suggests a rate per date, covering the base rate and the differential between room types.
Competitive insight is a separate view, where you choose up to five competitors to watch. It does not feed the everyday demand-based suggestion. Event data is a separate module again.
One realised result: the Flamingo Motel, a 108-room property in Ocean City, grew RevPAR 35 percent in one peak season. That is one property in one season, not a typical outcome, and it is quoted here because it is the number we can actually stand behind.
You approve every rate before it publishes.
Key takeaways: RevPAR
- RevPAR is room revenue divided by rooms available, including unsold ones. It is also ADR times occupancy.
- It is the tie-breaker when rate and occupancy disagree about which period was better.
- Always decompose it. Which half moved matters more than the total.
- It normalises across property sizes, which is why lenders and buyers use it.
- It ignores cost, non-room revenue and market context. Pair it with GOPPAR, TRevPAR and RGI respectively.
Frequently asked questions about RevPAR
What is a good RevPAR for an independent hotel?
There is no absolute benchmark worth using. RevPAR is a product of your market, season, location and room product, so a number that would be excellent for a rural guesthouse in February would be poor for a city centre property during a conference.
The meaningful benchmark is relative: your RevPAR against your competitive set's, which is RGI. An RGI above 1.0 means you are capturing more than your fair share of the market's revenue. That question has an answer. "Is $118 a good RevPAR" does not.
If you want an internal benchmark instead, use your own same-period-last-year figure and your own budget. Both are more informative than any industry average.
Is RevPAR or ADR the more important number?
RevPAR, if you have to pick one, because it cannot be gamed by ignoring empty rooms. But the pairing is what actually informs a decision, and the reason is that they answer different questions.
ADR tells you what your product achieved when it sold. RevPAR tells you how much of your capacity you converted, and at what price, in one figure. A strategy that maximises ADR alone will empty the hotel. A strategy that maximises occupancy alone will sell it too cheaply. RevPAR is the constraint that keeps both honest.
In practice the useful habit is to look at RevPAR first to judge the period, then immediately decompose into ADR and occupancy to understand it.
Why did my RevPAR fall when my revenue went up?
Almost always a change in the denominator. If you brought rooms back online after a refurbishment, added inventory, or reopened a wing, you now have more available rooms to divide by. Revenue can rise while revenue per available room falls.
The second cause is a change in the period length. Comparing a 31-day month to a 30-day one on total revenue is misleading, and RevPAR corrects for it, which sometimes reverses the apparent direction.
Check your room-nights-available figure before looking for a pricing explanation. It is the input people forget they changed.
How does RevPAR relate to GOPPAR?
RevPAR measures revenue per available room. GOPPAR measures gross operating profit per available room, so it subtracts the cost of running the hotel.
The gap between them is where distribution cost, labour and operating expense live. Two properties with the same RevPAR can have materially different GOPPAR if one of them buys its business through high-commission channels. That is why a RevPAR gain driven by OTA volume is worth less than an equivalent gain driven by direct bookings, and why RevPAR alone can send you in the wrong direction.
For an owner-operator, GOPPAR is closer to the number that matters. RevPAR is easier to calculate and to benchmark, which is why it remains the common language.
Should I include out-of-order rooms in the denominator?
The common convention is to exclude rooms that are genuinely unavailable for sale, such as those out for refurbishment, and to include everything else. What matters far more than which convention you pick is that you apply it consistently and disclose it.
The risk is a property that removes rooms from the denominator during a closure, posts an improved RevPAR, and reads it as a performance gain. It is not. It is a smaller building.
If you are comparing against a market benchmark, check how the report treats out-of-order inventory. Definitional differences explain a surprising share of apparent gaps.
Related terms
ADR
Room revenue divided by rooms sold. RevPAR's other half, and the one that tells you what your product achieved when somebody bought it. RevPAR equals ADR multiplied by occupancy, which is why decomposing is always the next step after reading it.
Occupancy rate
The percentage of available rooms sold. Multiply it by ADR and you have RevPAR. It is the half that carries a cost, since every additional room sold has to be cleaned, serviced and paid for.
RGI
Revenue Generation Index: your RevPAR divided by your comp set's. It answers the question RevPAR cannot, which is whether your result was good relative to the market you compete in rather than relative to yourself.
GOPPAR
Gross operating profit per available room. The same shape as RevPAR with cost subtracted, which makes it the closer proxy for what an owner actually takes home. The gap between the two is mostly distribution cost and labour.
Booking pace
The speed at which a future date is filling against the same point last year. RevPAR reports the result of pricing decisions already made, while pace is the earliest signal that a decision needs making at all.