Revenue Per Available Room (RevPAR)

Posted in Finance, Accounting and Economics Terms, Total Reads: 266

Definition: Revenue Per Available Room (RevPAR)

Revenue per available room is metric which is used to measure performance of the hotel industry. It can be obtained by multiplying occupancy rate of the rooms on an average in the hotel with the average revenue charged per room. It can also be obtained by dividing the total revenue generated through the occupancy of the guestrooms in the hotel divided by the total number of rooms used for that revenue generation for a specific time period.

However, RevPAR do not include other facilities provided by the hotel to its consumers such as restaurants, gym etc. The data obtained through calculation of RevPAR can also be used for comparisons among different hotels provided it is calculated for the same specified time period. This type of data is also used by various research analysts. Since, RevPAR also depends upon the occupancy rate hence, the more the occupancy rate of any hotel, the more will be RevPAR that particular hotel or chain of hotels will be able to generate and hence chances of generating more profits as well. It also depends upon the average daily rate (ADR) that is charged by the hotel for a single available room.

Mathematically, it can be denoted as:

RevPAR = ADR * Occupancy Rate


RevPAR= Total revenue from guestrooms/ Total number of rooms

For Example:

If any hotel is able to generate 5, 00,000 rupees in span of 20 days and the total number of available rooms for guests in that hotel is 500. Then, according to the above formula RevPAR for that hotel for a span of 20 days will be 1000 rupees.

Hence, this data can be used for analysis of various competitors operating in the hotel industry and also be used to judge customer response to various hotels in the seasonal time periods. It also varies from market to market depending on the demand.



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