What Is RevPAR in Hotels? Formula, Examples and How to Raise It

RevPAR stands for revenue per available room. It tells you how much room revenue your hotel earns for every room you could have sold, whether or not a guest slept in it. You get it by dividing total room revenue by the number of rooms available in the same period, or by multiplying your average daily rate (ADR) by your occupancy rate. A 150-room hotel that earns $15,000 in room revenue in one night has a RevPAR of $100.

This guide explains the formula, walks through examples, shows how RevPAR differs from ADR, occupancy, TRevPAR and net RevPAR, and covers what independent hotels can do to move the number.

Key Takeaways

• RevPAR = total room revenue ÷ total available rooms, or ADR × occupancy rate. Unsold rooms count in the denominator.
• It combines price and fill in one number, so it is a better health check than ADR or occupancy alone.
• RevPAR is a rooms-revenue metric, not a profit metric. It ignores operating costs and, normally, non-room revenue.
• Benchmark it against a competitive set with a RevPAR Index, and look at what each booking channel costs you before you celebrate a rise.
• Independent hotels raise RevPAR by lifting rate, occupancy or both, and by shifting mix toward lower-cost direct bookings.

What RevPAR means

RevPAR is short for “revenue per available room.” CoStar’s STR benchmarking team defines it as the room revenue generated per available room during a specified period, calculated as total room revenue divided by total available rooms.

The word “available” is the important one. An empty room still counts. If you have 50 rooms and sell only 20 tonight, the other 30 stay in the denominator. That is why RevPAR punishes hotels that hold a high rate but sit half empty, and also hotels that fill every room at a deep discount.

Owners use it for three jobs:

• Tracking: is the hotel earning more or less from its rooms than last month or the same month last year?
• Benchmarking: are we keeping pace with comparable hotels nearby?
• Diagnosis: is a drop caused by pricing, demand or distribution?

CoStar describes it as a top-line rooms-performance KPI that helps evaluate pricing and occupancy together.

How to calculate RevPAR

There are two routes to the same number.

Method 1: room revenue divided by available rooms

RevPAR = total room revenue ÷ total rooms available

CoStar’s example is a 150-room U.S. hotel with $15,000 in room revenue for one night: $15,000 ÷ 150 = $100. Wall Street Prep’s version uses 125 available rooms and $10,000 in room revenue, which gives $80.

Method 2: ADR times occupancy

RevPAR = ADR × occupancy rate

Investopedia shows that a $100 ADR at 90% occupancy produces a RevPAR of $90. Both methods agree because ADR is room revenue divided by rooms sold, and occupancy is rooms sold divided by rooms available. The “rooms sold” cancels out.

A worked example for a 40-room hotel

This one is hypothetical, but the arithmetic is what you would run on your own numbers.

• Rooms: 40
• Period: 30 days
• Available room nights: 40 × 30 = 1,200
• Rooms sold: 864 (72% occupancy)
• ADR: $125
• Room revenue: 864 × $125 = $108,000

RevPAR = $108,000 ÷ 1,200 = $90. Check it the other way: $125 × 0.72 = $90.

Get the denominator right

Most RevPAR mistakes happen in the denominator. Match it to the period you are measuring: 30 days at 40 rooms is 1,200 room nights, not 40. CoStar also notes that operators should account for rooms that are unavailable because of repairs or maintenance when counting available room nights. Be consistent about how you treat out-of-order rooms, and keep the same rule month to month so trends mean something.

RevPAR vs. ADR vs. occupancy

These three metrics sit together, and each hides something the others reveal.

Metric	What it measures	Formula	What it misses
Occupancy	Share of available rooms sold	Rooms sold ÷ rooms available	Price paid per room
ADR	Average price of rooms sold	Room revenue ÷ rooms sold	How many rooms sat empty
RevPAR	Revenue earned per available room	Room revenue ÷ rooms available, or ADR × occupancy	Costs, non-room revenue, hotel size

The University of West Florida’s revenue management text defines occupancy as the percentage of available rooms sold, ADR as room revenue divided by rooms sold, and RevPAR as the measure that combines both. It treats RevPAR as more informative than either alone because it reflects pricing and inventory use at the same time.

Why two hotels can share a RevPAR and look nothing alike

Take two hotels, each with a RevPAR of $90:

• Hotel A: ADR $180, occupancy 50%
• Hotel B: ADR $112.50, occupancy 80%

On paper they are equal. In practice Hotel B turns over more rooms, which usually means more housekeeping labor, more laundry and more wear, while Hotel A may have room to fill midweek gaps. RevPAR tells you the two are earning the same from rooms. ADR and occupancy tell you what to do about it.

If you want a visual on how listing presentation feeds the occupancy and rate side of that equation, this breakdown of photo ROI factors for rentals is a good companion to the metrics above.

What RevPAR does not tell you

RevPAR is a strong headline number, but it has boundaries you should know before you use it to make decisions.

It is not profit. Investopedia notes that RevPAR leaves out operating expenses and, ordinarily, revenue from food and beverage, spa and other non-room departments. A hotel can post a rising RevPAR while margins shrink because distribution costs, labor or utilities rose faster.

It ignores size. The same source cautions that RevPAR alone does not account for how large the property is. A 30-room inn and a 300-room resort can share a RevPAR and have very different total revenue, so use additional measures before judging overall performance.

It can hide the cost of getting the booking. This is the gap most owners feel in practice. Two $150 bookings produce identical RevPAR on a standard report, but if one arrived through a channel that charges a commission and the other came direct, you keep different amounts. More on that below.

TRevPAR, net RevPAR and RevPAR Index

Once you are comfortable with the basic metric, three variations answer different questions.

TRevPAR

TRevPAR uses total revenue per available room, so it includes food and beverage and other sources. CoStar says it adds useful context when a hotel earns a substantial share of revenue outside the rooms department. If your property has a busy restaurant, event space or spa, TRevPAR shows the full revenue each room supports.

Net RevPAR

Net RevPAR adjusts for what it costs to win the booking. The definitions vary by company, so state yours when you report it. One common starting point is HVS’s description of room revenue as net of discounts and sales taxes, and net of breakfast or other meals. Many owners go a step further and subtract distribution costs such as commissions to see what actually reaches the bottom line. If you do, label it clearly so nobody compares it with a standard RevPAR figure.

RevPAR Index (RGI)

A raw RevPAR number has no context. Is $90 good? It depends on your market. The RevPAR Index, also called the Revenue Generation Index (RGI), compares your RevPAR with an aggregated competitive set, market or submarket, with 100 as the group benchmark. Above 100 means you capture more than your expected share of the group’s RevPAR. Below 100 means less.

That makes RGI the fairest scorecard for an independent. A falling RevPAR in a soft market with a rising RGI means you are outperforming. A rising RevPAR with a falling RGI means the tide lifted everyone and your neighbors moved faster.

How OTA commissions interact with RevPAR

Standard RevPAR is calculated on room revenue, which is typically the rate the guest pays before any channel commission comes off. That means a booking made through an online travel agency (OTA) and an identical booking made on your own website contribute the same RevPAR, even though they do not contribute the same money to you.

Here is a simple, hypothetical illustration. Suppose a channel charges a 15% commission on a $150 night:

• RevPAR contribution: $150 (same as a direct booking)
• Money you keep before other costs: $150 − $22.50 = $127.50

The commission rate in your own contracts will differ, so use your actual agreements. The point is that two hotels with the same RevPAR can have different net results depending on channel mix. For that reason, track these alongside RevPAR:

1. Channel mix: the share of room nights from direct, OTA, group, corporate and wholesale.
2. Acquisition cost per channel: commissions plus marketing spend, divided by room nights or revenue.
3. Net revenue per available room: RevPAR after distribution costs, clearly labeled.
4. Guest value after the stay: repeat stays, direct rebooking and add-on spend, which an OTA booking often does not give you a clear path to.

When you evaluate a channel, do not stop at “did it raise occupancy?” Ask what the same room night would have cost to fill another way.

How to use RevPAR to improve performance

CoStar recommends analyzing RevPAR over time, benchmarking it against a competitive set and using it to spot opportunities in rooms, pricing, occupancy and market share. It also says RevPAR helps operators judge whether rooms are being effectively leveraged, whether a low-demand pricing strategy should change, and whether the property is keeping pace with competitors.

Here is how that looks as a routine for a small hotel.

1. Report it weekly and by day of week

A monthly average hides patterns. Look at RevPAR by day of week and by season. A hotel that sells out Fridays and Saturdays but runs 35% on Tuesdays has a midweek problem, not a general one.

2. Diagnose which lever moved

When RevPAR changes, split it into ADR and occupancy:

• ADR up, occupancy down: you may be priced above what the market will bear on some nights.
• ADR down, occupancy up: you may be discounting to fill rooms you could have sold at a better rate.
• Both flat but total revenue down: check available rooms. Out-of-order rooms or a changed room count can move the denominator.

3. Fill the gaps with group business

Group blocks are one of the most direct ways to lift occupancy on low-demand nights without discounting every transient room. Weddings, sports teams, corporate retreats, reunions and small conferences can take midweek or shoulder-season inventory that transient demand leaves empty. Success depends on outreach: someone has to find the organizers and follow up.

4. Shift mix toward direct

Every room night you move from a commissioned channel to your own website keeps more of the same revenue. Direct bookings do not change the RevPAR formula, but they change what RevPAR is worth. The usual building blocks are a clean booking engine, an accurate and active Google Business Profile, consistent OTA listings that point guests toward your site, steady review management, and social content that builds an audience who book you by name.

5. Make the listing do more work

Rate and occupancy both depend on whether a shopper clicks, trusts and books. Photos, descriptions, reviews and answers to common questions all shape that decision. Audit each channel the way a first-time guest would see it.

6. Set pricing rules, then review them

Use your own history and your competitive set to set minimum stays on peak nights, rate floors on shoulder nights and clear rules for last-minute inventory. Then review weekly. Pricing that was right in spring may be wrong by autumn.

Where HotelHero fits

RevPAR tells you what your rooms are earning. It does not tell you how to fill the empty ones at a cost you can live with. That is the work we do for independent hotels.

Our Direct Booking System is built to help independent hotels fill rooms with commission-free direct bookings. It combines a remote sales team focused on group bookings, targeted social media management that builds a guest audience and direct booking funnels, and online presence repair covering Google Business Profile optimization, OTA listings management and review services. We offer a 30-day deployment guarantee.

If you want to talk through how your own RevPAR, channel mix and group business could change, get in touch with our team.

Our perspective

Most owners we talk to know their occupancy and their ADR. Fewer know what their last 100 room nights actually cost them to win. RevPAR is the right place to start, but it stops one step short of the question that decides whether the hotel makes money.

After more than 20 years in hospitality, we see the same pattern in independents. They compete with chains and OTAs on visibility, so they hand over a slice of every booking to stay in front of guests. The slice is easy to ignore because it never appears as a line on the RevPAR report.

Our approach is to treat direct booking as a system, not a widget. That means sales outreach to groups who would otherwise never find you, social content that makes guests recognize your name, and a clean online presence so the person who searches for you ends up on your site. We built it for independent hotels because their constraints are different: small teams, limited budgets, and no brand name carrying demand for them.

Track RevPAR. Benchmark it. Then ask where each booking came from, and what it left in your account.

Chirag

FAQ

What does RevPAR stand for in the hotel industry?

RevPAR stands for revenue per available room. It measures the room revenue a hotel earns for each room it has available during a period, sold or not. It is one of the standard rooms-performance indicators in the industry.

What is a good RevPAR for a hotel?

There is no universal figure, because RevPAR depends on your market, class of hotel and season. The more useful question is how you compare with your competitive set. A RevPAR Index above 100 means you are earning more than your fair share of the group’s RevPAR.

Is RevPAR the same as revenue or profit?

No. RevPAR measures room revenue per available room and ordinarily leaves out food and beverage, spa and other non-room income. It also ignores operating expenses, so it cannot tell you how profitable the hotel is.

How is RevPAR different from ADR?

ADR divides room revenue by rooms sold, so it ignores empty rooms. RevPAR divides by rooms available, so empty rooms pull the number down. You can also reach RevPAR by multiplying ADR by occupancy.

Do OTA commissions change RevPAR?

Not in the standard calculation, which is based on room revenue. A booking through a commissioned channel and a direct booking at the same rate produce the same RevPAR, but you keep less from the first. Track channel mix and a net figure alongside RevPAR to see the difference.

Sources

• What is Revenue per Available Room (RevPAR)? And how to use it, CoStar
• RevPAR vs. TRevPAR, CoStar
• Glossary, STR Benchmark, CoStar
• RevPAR Explained, Investopedia
• RevPAR formula and calculator, Wall Street Prep
• Revenue Management Measurement, University of West Florida
• PAM, the most useful benchmark for hotel investment, HVS
• Real Estate Photo ROI Factors for Short-Term Rentals