RevPAR, ADR and occupancy: the three metrics every hotelier should know

When a hotelier says “we had a good year”, they usually mean the hotel was full. But occupancy is only a third of the picture. To know how the business is really doing, you need three metrics together.

Occupancy

The share of available rooms that were sold. If you have 40 rooms and sold 30 on a given night, occupancy is 75%.

The risk: 100% occupancy at very low rates can bring in less revenue than 80% at the right rates, with higher operating costs.

ADR (Average Daily Rate)

The average rate each sold room went for. It is calculated by dividing room revenue by the number of rooms sold. If those 30 rooms brought in €3,600, ADR is €120.

The risk: a high ADR in an empty hotel doesn’t help. ADR has to be read together with occupancy.

RevPAR (Revenue per Available Room)

Room revenue per available room, sold or not. There are two equivalent ways to calculate it:

• Room revenue ÷ available rooms: €3,600 ÷ 40 = €90
• ADR × occupancy: €120 × 75% = €90

RevPAR combines rate and occupancy in one number, which is why it is the key metric for comparing your hotel with competitors or with last year.

An example with two hotels

Two 40-room hotels in the same area. The first runs at 90% occupancy with an ADR of €85 (RevPAR €76.50). The second runs at 75% with an ADR of €120 (RevPAR €90). The second looks “emptier”, but earns more per room, with fewer room cleans, breakfasts and wear and tear.

Beyond the big three

As the business grows, more advanced metrics come into play:

• TRevPAR: total revenue (rooms, F&B, spa) per available room.
• Net RevPAR: RevPAR after channel commissions, to see what you really keep.
• Pick-up: how many bookings came in for a date over the last week.
• Channel mix: the share coming from each OTA, tour operator and your website.

SV Hospitality’s monthly report shows occupancy, ADR, RevPAR and channel mix against target, last year and your competitors.