Occupancy, ADR and RevPAR: the three hotel KPIs, with a worked example

The formulas

• ●Occupancy = rooms sold / rooms available
• ●ADR (average daily rate) = room revenue / rooms sold
• ●RevPAR (revenue per available room) = room revenue / rooms available, which is also occupancy x ADR

A worked month

A 40-room hotel in a 30-day month has 1,200 room nights available. It sells 900 of them for room revenue of 99,000, net of VAT and city tax.

• ●Occupancy = 900 / 1,200 = 75%
• ●ADR = 99,000 / 900 = 110
• ●RevPAR = 99,000 / 1,200 = 82.50

Why RevPAR wins arguments

Occupancy alone rewards selling cheap. ADR alone rewards selling little. RevPAR punishes both. A hotel that raises ADR from 110 to 125 while occupancy drops from 75% to 68% goes from 82.50 to 85 RevPAR: it earns more with fewer rooms to clean.

The five common mistakes

1. Including taxes in room revenue. Always net of VAT and city tax.
2. Including breakfast in room revenue when it is sold as a package. Split it out or your ADR is inflated.
3. Counting complimentary rooms as sold at zero. They drag ADR down; report them separately.
4. Out-of-order rooms. Decide once whether they are available, and apply it everywhere. See multi-property reporting.
5. Averaging percentages across months or properties. Always sum first, divide last.

Beyond the three

Once the basics are reliable, add GOPPAR (gross operating profit per available room) for owners, and pickup for revenue managers. But a hotel that cannot produce the three basic numbers the morning after is not ready for the others.

Try it

The free RevPAR and ADR calculator does the maths for a single period. In FrontDesk the numbers come from the bookings themselves after each night audit, per property and for the group.