The hotel industry’s headline metric, read from the owner’s side
RevPAR, RevPAR index and what they cannot tell an owner
RevPAR is a good measure of what happened to the rooms. It says nothing about why, and nothing about the golf course, the spa or the guest who did not come back.
RevPAR (revenue per available room) is rooms revenue divided by rooms available, or equivalently average daily rate multiplied by occupancy. The RevPAR index compares a hotel’s RevPAR with the average of a defined competitive set: an index of 100 means parity, above 100 means the hotel takes more than its fair share. Both are produced from the operator’s reporting and benchmark data such as STR. They measure rooms, after the fact. They do not measure the demand the estate failed to capture, the ancillary revenue a resort depends on, or the experience that decides whether the guest returns.
How RevPAR is calculated
Rooms revenue ÷ rooms available, for a period. Or ADR × occupancy. A 200-room resort taking €4,000,000 in rooms revenue over a 30-day month has 6,000 available room-nights and a RevPAR of about €667. Raise the rate or fill more rooms and RevPAR rises; both together and it rises faster. It excludes food and beverage, golf, spa, retail and residences, which at a resort can be as large as the rooms.
What the RevPAR index shows
The index places the hotel against a comp set the owner and operator agreed, usually through STR. It is the number most hotel management agreements test the operator on: fall below an agreed share of the comp set’s RevPAR for consecutive years and the owner gains rights. Two cautions. The comp set definition decides the index as much as performance does. And the index is relative: a whole market can be losing direct demand to intermediaries while every hotel in it holds an index of 100.
What RevPAR cannot tell an owner
- Why it moved. Rate, mix, channel cost and the digital estate’s capture of demand are inside the number, invisible.
- The other revenue centres. At a golf, spa or family resort the guest’s spend and loyalty are decided outside the rooms.
- The lag. RevPAR reports the past quarter. Reviews, direct-booking share and the guest’s experience move first.
- Service quality. A resort can hold its index for a year while the stay quietly stops earning the return visit.
- What the estate promised. A high rate sold on a promise the property does not keep converts into resistance later.
Reading RevPAR beside the guest
Owners argue RevPAR because it is the number they have. The Owner’s Audit supplies the number they lack: an unannounced stay at the asset, the digital estate that produced its demand reviewed beforehand, and a report on what a paying guest received and where the promise and the delivery diverged. RevPAR and the audit read together explain each other. Either alone is half a picture.
GOP, TRevPAR and the metrics beside it
GOP (gross operating profit) is what the operator kept after departmental and undistributed expenses; the second number performance tests use. TRevPAR (total revenue per available room) includes all revenue centres and suits resorts better than RevPAR. GOPPAR puts profit per available room. None of them show the guest either.
Questions owners ask
What is a good RevPAR?
Relative to the comp set and the asset’s positioning. An index above 100 in the right comp set, with a stable or rising direct share and stable reviews, is the combination owners look for. The absolute number depends on market and segment.
What is the difference between RevPAR and ADR?
ADR is the average rate for rooms sold. RevPAR is that rate multiplied by occupancy, so it reflects both price and how many rooms were sold.
What is a RevPAR index?
The hotel’s RevPAR divided by the average RevPAR of its competitive set, multiplied by 100. Above 100 means the hotel takes more than its fair share of the set’s rooms revenue.
Why does RevPAR matter in a hotel management agreement?
Most agreements test the operator on an agreed share of the comp set’s RevPAR over consecutive years, alongside a GOP test. Failing both can give the owner termination rights.
How does the Owner’s Audit relate to RevPAR?
RevPAR says what happened to the rooms. The audit shows why, from the guest’s side and from the digital estate that produced the booking, and reports it to the owner.
Is RevPAR the same as room revenue?
No. Room revenue is a total. RevPAR is that total divided by rooms available, which makes hotels of different sizes comparable.
What is a good RevPAR index in Europe?
Above 100 against the comp set a guest actually chooses between, with stable direct share and reviews. Markets, seasons and segments differ too much for a single absolute figure.
The Owner’s Audit
An in-residence hotel audit of the digital estate and the guest experience, commissioned by the owner rather than the operator. Unannounced, not silent. For luxury family resorts, golf resorts and five-star resorts in Europe.
Read how the Owner’s Audit runsEngagements begin with a conversation: [email protected]