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Lodging Operations

RevPAR

RevPAR (Revenue Per Available Room) is the hotel industry's leading revenue performance metric, calculated by multiplying Average Daily Rate (ADR) by occupancy rate — or by dividing total room revenue by total available rooms — to measure how effectively a property is generating revenue from its entire room inventory.

RevPAR — Revenue Per Available Room — is the hotel industry’s most widely used key performance indicator for measuring room revenue performance. Unlike metrics that only reflect what you charged guests who booked, RevPAR accounts for every room in the building, occupied or not, giving a single number that captures both pricing power and demand at once.

How to Calculate RevPAR

There are two equivalent formulas, and both produce the same result. The first divides total room revenue by the total number of available rooms during the period. The second multiplies Average Daily Rate (ADR) by occupancy rate.

  • Formula 1: RevPAR = Total Room Revenue ÷ Total Available Rooms
  • Formula 2: RevPAR = ADR × Occupancy Rate (%)

For a straightforward example: a hotel running an ADR of $100 at 80% occupancy generates a RevPAR of $80. That $80 reflects performance across all available rooms — not just the ones that were sold.

RevPAR vs. ADR: Why the Distinction Matters

ADR only measures revenue on occupied rooms — it tells you nothing about the rooms that went unsold. RevPAR folds in occupancy, making it a more complete picture of how efficiently a property is converting its room inventory into revenue. A hotel can post a high ADR and still underperform on RevPAR if occupancy is weak.

Who Owns RevPAR and How It’s Used Day-to-Day

The Revenue Management department owns RevPAR as its primary KPI. Revenue managers typically pull it daily for tactical pricing decisions, review weekly trends to catch emerging demand shifts, and conduct monthly and quarterly comparisons against budget and benchmarks. Results feed into the Daily Sales Report reviewed each morning by the General Manager and ownership groups. Deviations from target flow directly into a Variance Report that drives strategy adjustments.

Benchmarking with the RevPAR Index (RGI)

Raw RevPAR numbers only tell part of the story. The RevPAR Index — also called the Revenue Generating Index (RGI) — benchmarks a hotel’s RevPAR against its self-selected competitive set. An index score of 100 means the property is capturing its exact fair share of market revenue. Above 100 indicates outperformance; below 100 signals that competitors are capturing revenue the property should be winning.

STR (Smith Travel Research), now part of CoStar Group, compiles the industry’s standard benchmarking tool — the STAR Report — using voluntarily submitted operational data from hotels across every major U.S. market. The AHLA and CBRE Hotels also publish periodic RevPAR benchmarks by segment and region, widely used in investor reporting and feasibility studies.

2025 U.S. Benchmarks

As of 2025, U.S. hotel industry averages per STR/CoStar, CBRE, and AHLA data run approximately 63.4% occupancy, $162 ADR, and $102.78 RevPAR across all segments. Luxury and lifestyle properties average between $210 and $450. Benchmarks only carry meaning when compared against similar hotel types in the same competitive set and time period.

What RevPAR Doesn’t Tell You

RevPAR is a revenue metric, not a profit metric. It captures nothing about costs per occupied room (CPOR), ancillary revenue from F&B, spa, parking, or other outlets, or operating expenses. A hotel can post strong RevPAR while profitability erodes if variable costs are rising. Revenue managers use complementary metrics to fill those gaps:

  • TRevPAR (Total Revenue Per Available Room) — adds all revenue streams beyond rooms, essential for full-service and resort properties
  • GOPPAR (Gross Operating Profit Per Available Room) — deducts operating costs, providing a true profitability view
  • ARPAR (Adjusted Revenue Per Available Room) — strips out variable costs like OTA commissions for a net revenue perspective

Understanding these distinctions is especially important when evaluating how labor cost percentage and prime cost affect the bottom line that RevPAR alone won’t reveal.

Strategies That Drive RevPAR

RevPAR improves when ADR rises, occupancy rises, or both move upward together. On the rate side, upselling room upgrades and premium packages directly lifts ADR. On the occupancy side, effective reservation management — including channel mix optimization to reduce OTA commission drag — keeps rooms filled at the best net rate. Seasonal demand, local events, marketing effectiveness, and competitive set performance all shape what’s achievable.

One operational nuance worth flagging: out-of-order (OOO) rooms. Some properties exclude them from available room counts, which inflates RevPAR. Best practice includes OOO rooms in the denominator for a more conservative, accurate result — especially important when reporting to owners and investors.

RevPAR Across Hotel Departments

While Revenue Management owns the number, RevPAR thinking extends across the property. The F&B equivalent is RevPASH (Revenue Per Available Seat Hour), which applies the same “per available unit” framework to restaurant outlets. Understanding how menu engineering and seat turnover rate tie into outlet revenue helps full-service hotel operators see total property performance through a unified revenue management lens.

Common Uses

Department & Usage: RevPAR is owned by the Revenue Management department and serves as its primary KPI. Revenue managers monitor it daily to make tactical rate decisions, weekly to identify demand trends, and monthly and quarterly to review performance against budget, forecast, and competitive set benchmarks. General Managers use it in morning briefings via the Daily Sales Report; ownership groups and investors use it in asset performance reviews and feasibility reporting. STR's STAR Report is the standard tool for benchmarking RevPAR against a hotel's competitive set through the RevPAR Index (RGI). The metric applies to any lodging property — independent hotels, branded flags, resorts, and limited-service properties — and is calculated for any time period from a single night to a full fiscal year.

Frequently Asked Questions

RevPAR stands for Revenue Per Available Room. It measures the average revenue generated per available room in a hotel over a given period — combining both occupancy rate and average room rate into a single performance figure that reflects how efficiently a property is converting its room inventory into revenue.
There are two equivalent formulas. Formula 1: RevPAR = Total Room Revenue ÷ Total Available Rooms (room count × number of days in the period). Formula 2: RevPAR = ADR × Occupancy Rate (%). Both produce the same result. Example: a hotel with a $100 ADR and 80% occupancy has a RevPAR of $80.
ADR (Average Daily Rate) measures revenue only on rooms that were actually sold — it ignores vacant rooms entirely. RevPAR accounts for all available rooms, occupied and unoccupied, making it a more complete measure of overall revenue performance. A hotel can have a high ADR but poor RevPAR if occupancy is low.
There is no single universal benchmark — a strong RevPAR depends entirely on hotel type, location, and competitive set. In 2025, the U.S. national average is approximately $102.78. Luxury and lifestyle properties average between $210 and $450. RevPAR comparisons are only meaningful when made against similar property types in the same market.
The RevPAR Index (Revenue Generating Index) compares a hotel's RevPAR to the average RevPAR of its self-selected competitive set. A score of 100 means the property is capturing its fair share of market revenue. Above 100 indicates outperformance; below 100 indicates that competitors are capturing revenue the property should be winning. STR's STAR Report is the primary tool hotels use to calculate RGI.
RevPAR only measures room revenue — it excludes costs per occupied room (CPOR), ancillary revenue from F&B, spa, and parking, and all operating expenses. A hotel can post strong RevPAR while profitability erodes. Hotels use GOPPAR (Gross Operating Profit Per Available Room) and TRevPAR (Total Revenue Per Available Room) alongside RevPAR to get a complete financial picture.
Best practice is daily review for tactical rate adjustments, weekly for short-term trend analysis, monthly for strategy review against budget and forecast, and quarterly or annually for benchmarking against industry and competitive set data via tools like the STR STAR Report.
Practices vary. Some hotels exclude OOO rooms from the available room count, which inflates RevPAR. Best practice includes OOO rooms in the denominator for a more conservative and accurate calculation — particularly important when reporting to owners and investors who need a true picture of inventory utilization.
RevPAR captures room revenue only. TRevPAR (Total Revenue Per Available Room) includes all hotel revenue streams — rooms, F&B, spa, parking, and other outlets — divided by total available rooms. TRevPAR is especially important for full-service hotels and resorts where ancillary revenue is a significant share of total property income.
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