Definition of Revenue per Available Room (RevPAR)
Revenue per Available Room (RevPAR) is a key performance metric in the hospitality industry used to assess how effectively a hotel is generating revenue from its available rooms. It provides insights into the average revenue earned per room available, regardless of whether they are occupied or not.
Formulas:
- RevPAR = Average Daily Rate (ADR) × Occupancy Rate
- RevPAR = Total Room Revenue ÷ Total Rooms Available
So, whether you’re a hotelier looking to impress guests with plush pillows or a finance guru trying to showcase your hotel’s cash revenue, RevPAR is your go-to number!
| RevPAR | Average Daily Rate (ADR) |
|---|---|
| Measures revenue performance | Measures the average price charged per room |
| Accounts for occupancy | Does not account for occupancy |
| Shows overall revenue efficiency | Uses only sold rooms |
Examples:
Example 1:
- Average Daily Rate (ADR) = $150
- Occupancy Rate = 80%
- RevPAR = $150 × 0.80 = $120
Example 2:
- Total Room Revenue = $90,000
- Total Rooms Available = 500
- RevPAR = $90,000 ÷ 500 = $180
Related Terms:
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Average Daily Rate (ADR): The average income earned for an occupied room, calculated by dividing the room revenue by the total number of rooms sold.
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Occupancy Rate: The percentage of available rooms that are occupied, calculated by dividing the number of occupied rooms by the total number of available rooms.
Humorous Citations and Fun Facts:
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“RevPAR: Because knowing how much you’re earning per room is better than asking guests if they can pay their bills in smiles!” 😄
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Did You Know? The concept of RevPAR was first introduced in the 1980s when a hotelier jokingly said, “If I can’t count my dollars like I count sheep, what’s the point?” 🐑💸
Frequently Asked Questions:
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How is RevPAR calculated?
- RevPAR can be calculated by multiplying ADR by the occupancy rate or dividing total room revenue by the total rooms available.
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Why is RevPAR important?
- RevPAR provides insights into a hotel’s financial health, helping hotel managers make informed revenue management decisions.
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Can a hotel have a high RevPAR but low profits?
- Yes! A hotel can have a high RevPAR due to higher rates or occupancy but could still have low profits due to high operating costs.
Suggested Resources:
- The Cornell School of Hotel Administration has great insights on RevPAR and various hospitality metrics.
- “Revenue Management for the Hospitality Industry” by David K. Hayes and Allisha A. Miller.
graph TD;
A[Total Room Revenue] --->| Divided by | B[Total Available Rooms]
A --->|Multiplied by|C[Avg Daily Rate]
A -----> |Multiplied by| D[Occupancy Rate]
B -->|Results in| E[RevPAR]
Test Your Knowledge: Revenue per Available Room (RevPAR) Quiz
Thank you for delving into the delightful world of RevPAR! Remember, in the hospitality business: keep your rooms filled and your calculations precise, and you’ll never need to check ‘under your bed’ for lost revenue! 🏨💰
