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RevPAR: Revenue Per Available Room Explained

By OnlineHotelier Team 5 min read

What is RevPAR?

RevPAR = Revenue Per Available Room

The most important metric in hotel revenue management. It measures how well you're filling rooms AND at what price.

RevPAR Formula

There are two ways to calculate RevPAR:

RevPAR = Total Room Revenue ÷ Total Available Rooms

Or alternatively:

RevPAR = ADR × Occupancy Rate

Both formulas give you the same result. Use whichever is easier based on the data you have.

RevPAR Calculation Example

How RevPAR is calculated from occupancy and ADRA 50-room hotel in Jaipur sells 35 rooms tonight for ₹1,40,000 of room revenue. Occupancy is 35 ÷ 50 = 70%. ADR is ₹1,40,000 ÷ 35 = ₹4,000. RevPAR is 70% × ₹4,000 = ₹2,800, the same as ₹1,40,000 ÷ 50 available rooms.50 roomsavailable tonight35 rooms soldtonight₹1,40,000room revenue tonightOccupancy 70%35 sold ÷ 50 availableADR ₹4,000₹1,40,000 ÷ 35 soldRevPAR ₹2,80070% × ₹4,000or ₹1,40,000 ÷ 50 roomsPrice and fillin one number1. Tonight: 50 rooms, 35 sold, ₹1,40,000 earned2. Occupancy: 35 of 50 rooms = 70%3. ADR: ₹1,40,000 ÷ 35 rooms sold = ₹4,0004. RevPAR: 70% × ₹4,000 = ₹2,800How RevPAR is calculated from occupancy and ADRA 50-room hotel in Jaipur sells 35 rooms tonight for ₹1,40,000 of room revenue. Occupancy is 35 ÷ 50 = 70%. ADR is ₹1,40,000 ÷ 35 = ₹4,000. RevPAR is 70% × ₹4,000 = ₹2,800, the same as ₹1,40,000 ÷ 50 available rooms.Tonight50 rooms available35 rooms sold₹1,40,000 room revenueOccupancy 70%35 sold ÷ 50 availableADR ₹4,000₹1,40,000 ÷ 35 soldRevPAR ₹2,80070% × ₹4,000or ₹1,40,000 ÷ 50 rooms1. Tonight: 50 rooms, 35 sold, ₹1,40,000 earned2. Occupancy: 35 of 50 rooms = 70%3. ADR: ₹1,40,000 ÷ 35 rooms sold = ₹4,0004. RevPAR: 70% × ₹4,000 = ₹2,800
RevPAR combines occupancy and ADR. It spreads your room revenue across every room you had to sell, not only the ones you sold, so it moves when either your price or your occupancy moves.

Example: 50-Room Hotel in Jaipur

Total Rooms50
Rooms Sold Tonight35
ADR (Average Rate)₹4,000
Total Room Revenue₹1,40,000
Occupancy70%
RevPAR₹2,800

Calculation: ₹1,40,000 ÷ 50 rooms = ₹2,800 RevPAR

Or: ₹4,000 ADR × 70% occupancy = ₹2,800 RevPAR

Why RevPAR Matters

RevPAR is better than looking at occupancy or ADR alone because:

  • High occupancy at low rates = Low RevPAR (not good)
  • High rates with low occupancy = Low RevPAR (not good)
  • Balanced occupancy and rates = High RevPAR (ideal)
Key Insight: A hotel with 60% occupancy at ₹5,000 ADR (RevPAR ₹3,000) performs better than a hotel with 90% occupancy at ₹3,000 ADR (RevPAR ₹2,700).

Where RevPAR is Used

Use Case How RevPAR Helps
Performance Tracking Compare today vs last month, or this year vs last year
Competitor Analysis Benchmark against similar hotels in your market
Pricing Decisions See if rate changes are improving overall revenue
Investor Reports Standard metric that investors and owners expect
Staff Incentives Tie bonuses to RevPAR growth, not just occupancy

RevPAR vs Other Metrics

Metric What It Measures Limitation
RevPAR Revenue efficiency per available room Doesn't include non-room revenue
ADR Average rate of sold rooms only Ignores unsold rooms
Occupancy Percentage of rooms sold Ignores pricing
TRevPAR Total revenue per available room More complex to calculate

How to Improve RevPAR

  1. Dynamic Pricing: Raise rates during high demand, lower during low demand
  2. Length of Stay Controls: Use MLOS during peak periods
  3. Channel Mix: Reduce OTA dependency, increase direct bookings
  4. Upselling: Upgrade guests to higher room categories
  5. Demand Forecasting: Predict busy periods and price accordingly

Channel mix is where most Indian hotels leave RevPAR on the table. A direct booking website that undercuts your OTA rate moves volume to a zero-commission channel, so net RevPAR rises even when gross RevPAR holds flat. If occupancy is the constraint instead, widening your OTA listing to platforms you are not on yet adds distribution without adding fixed cost.

Pro Tip: Track RevPAR daily, weekly, and monthly. Compare same day last week, same day last year. Look for patterns to optimize your pricing strategy.

Dynamic pricing needs a reference point. Before you raise or drop rates, benchmark your rate against your compset using hotels of the same class and rating. You get the median rate of your matched set and your percentile rank within it, so you can tell a deliberate premium from an accidental one.

Good RevPAR Benchmarks (India)

Hotel Type Typical RevPAR Range
Budget Hotels ₹800 - ₹1,500
Mid-Scale Hotels ₹1,500 - ₹3,500
Upscale Hotels ₹3,500 - ₹7,000
Luxury Hotels ₹7,000 - ₹15,000+

Note: RevPAR varies significantly by location, season, and market conditions.

Related Tools & Guides

Revenue & Profit Estimator

Calculate your net revenue and profit margin per room night

Competitor Rate Analysis

See where your rate sits against matched hotels by star class

ADR & ARR Guide

The formula every Indian hotel owner needs to know

Occupancy Rate Guide

What good occupancy looks like and how to improve it

Frequently Asked Questions

What is RevPAR in a hotel?
RevPAR stands for Revenue Per Available Room. It measures how much revenue a hotel earns per available room. Whether that room is occupied or not. It combines both your occupancy rate and your room rate into a single performance number.
How do you calculate RevPAR?
RevPAR can be calculated two ways: (1) RevPAR = ADR × Occupancy Rate, or (2) RevPAR = Total Room Revenue ÷ Total Available Rooms. For example, if your ADR is ₹4,000 and occupancy is 75%, your RevPAR is ₹3,000.
What is a good RevPAR for a hotel in India?
A good RevPAR depends on your hotel category and location. Budget hotels in Tier-2 Indian cities typically target ₹1,500: ₹2,500 RevPAR, while mid-scale city hotels aim for ₹3,000: ₹5,000. Luxury properties in metros can achieve ₹8,000+ RevPAR. Compare against your own historical performance and your local competitive set.
What is the difference between RevPAR and ADR?
ADR (Average Daily Rate) measures the average room rate you charge for occupied rooms only. RevPAR accounts for ALL available rooms: including unsold ones. A hotel with a high ADR but low occupancy can have a poor RevPAR. RevPAR is a more complete measure of revenue performance.
How can a hotel improve its RevPAR?
To improve RevPAR, hotels should: (1) use dynamic pricing to raise rates during high-demand periods, (2) list on multiple OTAs to increase occupancy, (3) close low-rate channels when demand is high, (4) upsell room upgrades and packages, and (5) track competitor rates to stay competitively priced.