What Is RevPAR?

RevPAR — revenue per available room — measures how much room revenue a hotel generates for every room it has, whether sold or not. It is calculated as room revenue divided by available rooms, or equivalently ADR multiplied by occupancy. Because it combines rate and occupancy in one number, RevPAR is the hotel industry's standard top-line performance metric.

How RevPAR Is Calculated

RevPAR = Room Revenue ÷ Available Room Nights, or
RevPAR = ADR × Occupancy

Illustrative example: a 100-room hotel runs 70% occupancy at a $140 ADR. RevPAR = $140 × 0.70 = $98. The same hotel could reach a $98 RevPAR at 80% occupancy and a $122.50 ADR — same top line, different operating profile.

Why RevPAR Matters

RevPAR answers the question ADR and occupancy each dodge: how productive is the room inventory overall? Two hotels with identical RevPAR can have very different profitability, however, because occupancy-driven revenue carries more cost than rate-driven revenue. That is why analysts read RevPAR first, then decompose it into ADR and occupancy to understand quality.

RevPAR Index (RGI)

The STR report benchmarks a hotel's RevPAR against its competitive set. A RevPAR index of 100 means the hotel captures exactly its fair share of market revenue; above 100 means it outperforms its comp set, below 100 means it underperforms. For buyers, a low RGI at a well-located property is often the core of a value-add thesis — the revenue exists in the market; the hotel just isn't capturing it.

RevPAR in Valuation

Underwriting typically projects RevPAR growth from market supply and demand, then builds down to net operating income through the expense structure. Because hotel value is income-driven, sustained RevPAR improvement is the most direct operational lever on asset value — see How Are Hotels Valued? and What Is a Hotel Capitalization Rate?.

RevPAR's Limits

RevPAR excludes food and beverage, meeting space, parking, and other revenue — a significant blind spot for full-service and resort properties, where analysts supplement with TRevPAR (total revenue per available room). It also says nothing about expenses: a RevPAR leader with a bloated cost structure can trail the market in profit.

Key Takeaways

• RevPAR = ADR × occupancy; it is the standard measure of room revenue productivity.
• RevPAR index (vs. the comp set) reveals whether a hotel earns its fair market share.
• Same RevPAR, different mix — rate-driven RevPAR is usually more profitable.
• For full-service hotels, look at total revenue, not just RevPAR.

Frequently Asked Questions

What is the difference between RevPAR and ADR?
ADR measures the average rate on rooms actually sold; RevPAR spreads room revenue across all available rooms, so it also captures occupancy.

What is a good RevPAR?
One that meets or beats the hotel's competitive set — measured by a RevPAR index at or above 100 — and trends positively over time.

What is TRevPAR?
Total revenue per available room, including food and beverage and other income. It is the better top-line measure for hotels with substantial non-room revenue.

Does high RevPAR mean high profit?
Not necessarily. Profitability depends on how the RevPAR is achieved and what it costs to achieve it.

How do buyers use RevPAR in offers?
As the anchor of revenue projections — typically benchmarked against the comp set and stress-tested against market supply growth.

---

Curious how your property's RevPAR translates to value? [Schedule a confidential consultation](/contact).