Revenue per available room (RevPAR)

Revenue per available room, almost always shortened to RevPAR, is the hotel industry's headline performance metric because it combines two separate levers, how many rooms are filled and how much each one sells for, into one number. A hotel that is fully booked at low rates and one that is half-empty at high rates can post the same RevPAR, which is exactly why the industry watches it alongside its two components.

RevPAR is calculated as [[average-daily-rate]] × [[occupancy-rate]], which is equivalent to total room revenue divided by the total number of available rooms, including unsold ones, over the period. That second form of the formula is the reason it differs from average daily rate alone: average daily rate only reflects rooms that were actually sold, while RevPAR is diluted by every room that stayed empty.

Hotel revenue managers use RevPAR to compare performance across properties of different sizes, to benchmark against a competitive set, and as the central input to revenue management and dynamic pricing decisions about when to raise or lower rates. A common pitfall is comparing RevPAR across markets or seasons without accounting for cost structure: a high RevPAR achieved through heavy discounting to drive occupancy can still produce lower profit than a slightly lower RevPAR at a healthier rate.