What is REVPAR?
Revenue Per Available Room is the revenue generated based on the total number of room nights available. The formula for REVPAR is Total Revenue divided by Total Available Rooms. REVPAR is a much better measure to gauge the overall success of a management plan. Since REVPAR takes overall occupancy into consideration, we must find a balance between price and occupancy. Consider the following example: I have an establishment with 100 rooms. If I sell 30 rooms at an ADR of $189, my REVPAR for that night is $56.70. If however, I can sell 75 rooms by dropping my ADR to $159, my REVPAR is $119.25. The same concept applies to individual units. In February we have 28 opportunities to sell your unit. If we maintain an ADR of $189 and sell your unit 15 nights, your REVPAR is $101.57. If we drop your ADR to $159 to sell your unit 20 nights, your REVPAR increases to $113.57, for monthly revenue increase of 12%.
