RevPAR is calculated using which formula?

RevPAR, or Revenue Per Available Room, is a key performance metric in the hospitality industry used to assess a hotel’s ability to generate revenue from its available rooms. The correct calculation for RevPAR involves dividing the total rooms revenue by the total number of rooms available for sale.

This formula effectively combines two important factors of hotel performance: occupancy and average daily rate (ADR). By using the total number of rooms available, RevPAR provides a more comprehensive view of performance than simply analyzing revenue from rooms sold. This metric is crucial as it gives hoteliers insight into how well they are filling their rooms and earning revenue overall, rather than just considering those rooms that were actually sold.

Utilizing the total number of rooms available allows hotel management to make informed decisions regarding pricing strategies, marketing efforts, and operational efficiencies. It highlights the revenue potential of the property and can serve as a benchmark for comparative analysis against competitors or for tracking trends over time.