RevPAR meaning in hospitality

RevPAR stands for Revenue Per Available Room. It's a key metric in the hospitality industry to measure a property's performance. You calculate RevPAR by dividing total room revenue by total rooms available or by multiplying ADR by occupancy. This gives you a snapshot of how well you're utilising your room inventory and pricing.

RevPAR is a big deal in hospitality because it combines two key things: what you're charging for rooms and how many you're filling. It allows you to compare your performance to competitors and industry benchmarks, regardless of property size. By tracking RevPAR you can make informed decisions on pricing, marketing and overall strategy to grow your bottom line.

Let's say you're the revenue manager of a 100 room hotel. Last month your ADR was £100 and occupancy was 80%. Your RevPAR was £80 (£100 x 80%). This month you notice a dip in bookings so you lower your rates to £90. More guests book in and occupancy goes up to 90%. Your new RevPAR is £81 (£90 x 90%). Despite the lower room rate you've actually increased your RevPAR. Sometimes adjusting your price can lead to better overall performance. By keeping an eye on RevPAR you can tweak your pricing and marketing to maximise revenue in changing market conditions.