Revenue Per Available Room (RevPAR)

What Is Revenue Per Available Room?

Revenue per available room, or RevPAR, is a hotel performance metric that measures room revenue earned for each available room during a period. It combines price and occupancy into one number, making it one of the most common operating measures in lodging.

RevPAR is useful because a hotel can improve revenue in two different ways: charging higher room rates or filling more rooms. Average daily rate shows price. Occupancy shows utilization. RevPAR connects the two.

RevPAR Formula

RevPAR is commonly calculated in either of two equivalent ways:

If a hotel has 100 rooms available for one night and earns $15,000 of room revenue, RevPAR is $150. If the same hotel has an average daily rate of $200 and occupancy of 75%, RevPAR is also $150.

What RevPAR Shows

RevPAR gives owners, operators, lenders, and investors a quick read on room-revenue productivity. A hotel with a high room rate but low occupancy may not be using its inventory well. A hotel with high occupancy but heavy discounting may be busy without being economically strong. RevPAR helps separate activity from revenue quality.

The metric is especially important in hotel real estate because rooms are perishable inventory. An unsold room night cannot be stored and sold later. That makes yield management central to the business. Operators adjust rates, distribution channels, group blocks, minimum stays, and promotions to balance occupancy and price.

Comparison With Related Hotel Metrics

RevPAR is stronger than ADR alone because it accounts for empty rooms. It is stronger than occupancy alone because it accounts for price. It is weaker than profit metrics because it ignores cost structure.

Hotel Investment Context

Hotel analysts often compare RevPAR growth against a property’s competitive set, market, submarket, and prior-year performance. A hotel can grow RevPAR because the whole market is improving, because management is outperforming peers, or because renovations, brand changes, or distribution strategy are changing the property’s positioning.

RevPAR also matters for valuation. Higher sustainable RevPAR can support higher net operating income if costs are controlled. But the link is not automatic. A property may lift RevPAR through expensive marketing, third-party booking commissions, labor-heavy service levels, or renovation spending that reduces near-term cash flow.

What the Metric Leaves Out

RevPAR focuses on room revenue. It does not include restaurant, spa, parking, resort fee, meeting-space, or other property revenue unless the metric is modified. It also does not reflect payroll, insurance, property taxes, franchise fees, repairs, capital expenditures, or debt service.

That limitation is important when comparing hotel types. A limited-service hotel may have lower total revenue but simpler operations and higher margins. A resort may have meaningful non-room revenue that RevPAR misses. A convention hotel may have group demand and food-and-beverage revenue that change the economics beyond room rate and occupancy.

The Bottom Line

RevPAR measures how much room revenue a hotel earns per available room. It is a central lodging metric because it blends rate and occupancy, but it should be read with expenses, market position, non-room revenue, and profit measures before drawing investment conclusions.