RevPAR

RevPAR (Revenue Per Available Room) is a performance metric in the hospitality industry used to assess a hotel’s ability to generate Revenue from its available rooms. It is calculated by dividing the total room Revenue by the number of available rooms over a specific period.

Formula: RevPAR = Total Room Revenue / Total Available Rooms

Example 1: A hotel has 100 rooms and generates $20,000 in room Revenue in one day. The RevPAR is calculated as follows:

RevPAR = $20,000 / 100 = $200

Example 2: If the same hotel sells 80 of its 100 rooms at an average rate of $250 each, the total room Revenue is $20,000, and the RevPAR would still be:

RevPAR = $20,000 / 100 = $200

Case Study: A luxury hotel implements a dynamic pricing strategy that increases its average room rate from $200 to $300 during peak season. If the hotel has 200 rooms and sells 150 rooms, the RevPAR for this period would be:

Room Revenue = 150 rooms * $300 = $45,000

RevPAR = $45,000 / 200 = $225

This indicates improved Revenue performance compared to a previous period with a lower average rate.