Revenue Per Available Room
Revenue per available room (RevPAR) is a metric used in the hospitality industry to measure hotel performance. The measurement is calculated by multiplying a hotel's average daily room rate (ADR) by its occupancy rate. RevPAR is also calculated by dividing a hotel's total room revenue by the total number of available rooms in the period being measured.
Definition: Revenue per Available Room (RevPAR) is a key performance metric used in the hotel industry. It is calculated by multiplying a hotel's Average Daily Rate (ADR) by its occupancy rate. RevPAR can also be calculated by dividing the hotel's total room revenue by the total number of available rooms during the measurement period.
Origin: The concept of RevPAR originated in the 1980s as the hotel industry rapidly expanded. Industry professionals needed a more comprehensive metric to evaluate hotel performance. It was first introduced by hotel management and consulting firms and gradually became an industry standard.
Categories and Characteristics: There are two main methods to calculate RevPAR: 1. By multiplying the Average Daily Rate (ADR) by the occupancy rate; 2. By dividing the total room revenue by the total number of available rooms. The former is more suitable for short-term analysis, while the latter is better for long-term evaluation. RevPAR's characteristic is that it comprehensively reflects a hotel's pricing strategy and occupancy rate, but it does not solely indicate the hotel's profitability.
Specific Cases: Case 1: A hotel has 100 rooms, with an ADR of $100 and an occupancy rate of 80% on a particular day. The RevPAR for that day would be $100 * 0.8 = $80. Case 2: A hotel has a total room revenue of $300,000 in a month, with 30 days in the month and 100 rooms. The RevPAR for that month would be $300,000 / (30 days * 100 rooms) = $100.
Common Questions: 1. Why can't RevPAR solely indicate a hotel's profitability? Because RevPAR only considers room revenue and does not account for other revenues and costs. 2. How can RevPAR be improved? It can be improved by increasing the Average Daily Rate (ADR) or by increasing the occupancy rate.
