Revenue per available room (RevPAR) has long been the hotel industry’s key benchmarking metric. Its success as a key performance indicator (KPI) is primarily the result of how easy it is to gather the information, calculate and understand results.
RevPAR combines the results of both occupancy and average rate into one number. Calculating RevPAR is easy, because all you need is occupancy and average daily rate:
RevPAR = Occupancy * ADR
However, its simplicity and comprehensibility conceal its shortcomings.
Here we illustrate why RevPAR doesn’t tell a hotel’s full story.