RevPAR, ADR and occupancy: what hotel owners should track
Three numbers describe most of a hotel's room performance. Knowing how they connect tells you whether to raise rates, sell more rooms, or both.
Occupancy
Occupancy is the share of your available rooms that were sold.
Occupancy = rooms sold ÷ rooms available
A high occupancy figure alone can hide a problem. A hotel that is always full may be priced too low.
ADR
ADR is average daily rate: the average price you got for each room sold.
ADR = room revenue ÷ rooms sold
ADR rises when you sell better room types, get higher rates, or give fewer discounts.
RevPAR
RevPAR is revenue per available room. It counts every room you have, sold or not, so it shows occupancy and rate together.
RevPAR = room revenue ÷ rooms available = occupancy × ADR
Example with made-up numbers: a 40-room hotel sells 24 rooms in a night at an average of ₹5,000. Occupancy is 60%, ADR is ₹5,000, room revenue is ₹1,20,000, and RevPAR is ₹3,000.
Which one to watch
Track all three, but make RevPAR the headline. If occupancy rises and RevPAR falls, you are selling rooms too cheaply. If ADR rises and RevPAR falls, you are pricing out guests.
Many owners also track GOPPAR, gross operating profit per available room, which brings costs into the picture.
Compare each number with the same period last year and with your competitor set, not with last month. Hotels have strong seasons and last month is rarely a fair comparison.