The term RevPAR is used often in business travel management, but what does it actually mean?
RevPAR is a key performance indicator used by the hotel industry to calculate a given hotel’s financial performance.
It stands for revenue per available room and it’s calculated by multiplying the average daily rate (ADR) with the occupancy rate. For example, if a hotel sold 100 of its 150 available rooms for a total of £11,500, the RevPAR would be:
ADR £115 (11,500 / 100) x occupancy rate 0.67 (100 / 150) = £77.05 RevPAR
However RevPAR is limited as a KPI, in the sense that it doesn’t take into consideration revenue generated from amenities and other hotel services such as spas and gyms.