Key takeaways
- RevPAR combines price and occupancy in a single figure, and it can be calculated in two ways that must give the same result
- Reported RevPAR is before commission, so Net RevPAR should be reviewed as well
- Changes should be explained with a bridge that separates ADR, occupancy and mix
RevPAR (Revenue Per Available Room) is average room revenue per available room per night. It is a figure shared by the GM, CFO, asset manager and investor. The figures in this article are hypothetical examples for a 100-room hotel and do not refer to any real hotel.
Calculation formulas
Direct: RevPAR = Total Room Revenue ÷ Total Rooms Available
Indirect: RevPAR = ADR × Occupancy %
Total rooms available is the number of rooms multiplied by the number of days. Getting the same result from both methods is a built-in check on the accuracy of the data.
Example 1: a small hotel
A 50-room hotel, a 31-day month: rooms available 1,550, rooms sold 960, room revenue THB 7,680,000
- Direct: 7,680,000 ÷ 1,550 = THB 4,955
- ADR = THB 8,000 and occupancy = 61.94%
- Indirect: 8,000 × 61.94% = THB 4,955
Example 2: a luxury hotel in its first year
- Rooms Available 36,500, Rooms Sold 19,998
- Room revenue THB 256,518,000
- ADR THB 12,827, occupancy 54.8%
- Direct: 256,518,000 ÷ 36,500 = THB 7,028
- Indirect: 12,827 × 54.79% = THB 7,028
Why look at ADR, occupancy and RevPAR together
- High price, low volume: 20,000 × 30% = RevPAR of THB 6,000
- Low price, high volume: 8,000 × 80% = RevPAR of THB 6,400
- Sample hotel, first year: 12,827 × 54.8% = RevPAR of THB 7,028
A high ADR is not always good if rooms go unsold, and high occupancy is not good if prices have to be cut until the profit disappears.
RevPAR Trajectory
| Year | ADR (THB) | OCC | RevPAR (THB) | Annual growth |
|---|---|---|---|---|
| Year 1 | 12,827 | 54.8% | 7,029 | — |
| Year 2 | 13,340 | 55.8% | 7,444 | +5.9% |
| Year 3 | 13,740 | 57.0% | 7,832 | +5.2% |
| Year 6 | 14,990 | 59.5% | 8,919 | +4.4% on average |
| Year 12 | 16,650 | 61.5% | 10,240 | +2.3% on average |
This table calculates RevPAR from ADR multiplied by rounded occupancy. Year 12 is about 1.46 times year 1, equivalent to a CAGR of 3.5% over 11 periods.
Comparison with benchmarks
The ranges are estimates, not market statistics. Check actual benchmark reports before using them.
| Hotel Tier | Approximate RevPAR (THB) |
|---|---|
| Budget / Hostel | 600–1,200 |
| Midscale 3-star | 1,500–3,000 |
| Upscale 4-star | 3,000–5,500 |
| Luxury 5-star | 8,000–18,000 |
| Ultra-Luxury | 15,000–35,000 |
The sample hotel starts below the lower bound of the luxury group during the ramp-up period and moves into that range as it grows.
RevPAR Index (RGI)
In industry practice, RevPAR is compared with the competitive set using the formula
RGI = (our RevPAR ÷ compset average RevPAR) × 100
An RGI above 100 means outperforming, 100 means fair share, and below 100 means underperforming.
| Hotels in the compset (hypothetical) | Average annual RevPAR (THB) |
|---|---|
| Hotel A | 11,000 |
| Hotel B | 10,000 |
| Hotel C | 5,000 |
| Hotel D | 6,000 |
| Hotel E | 6,500 |
| Compset Average | 7,700 |
| Sample hotel, first year | 7,028 |
| RGI | 91.3 |
Strategic framework for increasing RevPAR
ADR-Led
Use when the brand is strong, demand is high and competition is limited. The methods are premium positioning, dynamic pricing and limiting discounts on OTAs.
Occupancy-Led
Use when the hotel is newly opened or the market is oversupplied. The methods are aggressive promotions, increasing visibility and packaging. The risk is brand dilution if used for long.
Balanced
Use when a luxury hotel is in its ramp-up period. In years 1–2, sacrifice some ADR to push occupancy. In years 3–5, stabilise occupancy and then push ADR. From year 6 onwards, move into premium pricing.
RevPAR Bridge
- ADR effect: the effect of changes in average rate
- Occupancy effect: the effect of the occupancy rate
- Mix effect: the effect of the proportion of room types
Prior-year RevPAR 6,500 → ADR +200 → occupancy +250 → mix +52 → current-year RevPAR THB 7,002, an increase of 7.7%
Channel mix and Net RevPAR
A hypothetical example, split by the proportion of room nights sold. Overall occupancy is 54.8%, so RevPAR per channel = share × ADR × 54.79%
| Channel | Proportion | ADR (THB) | RevPAR (THB) | Commission |
|---|---|---|---|---|
| Direct Website | 15% | 13,430 | 1,104 | 0% |
| Brand.com | 10% | 13,950 | 764 | 5% |
| Major OTA A | 30% | 13,220 | 2,173 | 15% |
| Major OTA B | 8% | 13,430 | 589 | 18% |
| Wholesale | 25% | 11,160 | 1,529 | 25% |
| Corporate / Group | 12% | 13,220 | 869 | 0% |
| Total (blended) | 100% | 12,826 | 7,028 | — |
After deducting commission, Net RevPAR is about THB 6,175, around 12.1% lower than gross. Increasing the direct share therefore affects profit directly even when RevPAR stays the same. The blended ADR row is rounded, so it differs slightly from 12,827.
Cautions when using RevPAR
1. It excludes revenue from other departments
For a view of the whole hotel, use TRevPAR.
2. Commission Impact
2. Gross RevPAR is before commission; review it alongside Net RevPAR.
3. Service charge and VAT are not included in RevPAR
For a rate of THB 10,000 plus 10% service charge and 7% VAT, the guest pays THB 11,770, but RevPAR uses THB 10,000. The 7% VAT rate has been extended to 30 September 2027 under Royal Decree No. 807.
4. Comp and house use
Under the USALI definition, complimentary rooms count as rooms occupied but not rooms sold, so they are excluded from ADR and do not increase headline occupancy.
How to monitor
- Daily pickup report: today's pickup and forward 7–14 days
- Weekly performance review: compare against daily benchmarks and prior-year booking pace
- Monthly board report: RevPAR Index, channel and forward 90-day pace
The RevPAR family of KPIs
| KPI | Formula | Objective |
|---|---|---|
| RevPAR | Room Revenue ÷ Available Rooms | Rooms top line |
| TRevPAR | Total Revenue ÷ Available Rooms | All departments |
| Net RevPAR | (Room Rev − Commission) ÷ Avail Rooms | Actual net revenue |
| GOPPAR | GOP ÷ Available Rooms | Operating profit |
| NOIPAR | NOI ÷ Available Rooms | Net Operating Income |
| EBITDAPAR | EBITDA ÷ Available Rooms | Investor perspective |
| PROFPAR | Net Profit ÷ Available Rooms | Bottom-line |
The sample hotel has a first-year RevPAR of 7,028, TRevPAR of 7,800 and GOPPAR of THB 3,900. In year 12 these rise to 10,240, 11,300 and THB 5,700.
Lessons and recommendations
- First-year RevPAR can fall below the luxury range during ramp-up
- Year 12 RevPAR enters the luxury range, showing that the trajectory is consistent with the plan
- First-year RGI of 91.3 is below fair share; the target is 100 by year 6
- CAGR of 3.5% over 11 periods must be tested against inflation and a new compset
If RevPAR stays below the critical threshold set in the plan for several years, the pricing strategy must be reviewed immediately. Focus on occupancy in years 1–2; from year 3, balance ADR and occupancy. Track weekly, and aim for RGI to reach fair share by year 6.
Bottom Line
RevPAR = ADR × occupancy is the industry's scoreboard, combining price and occupancy in a single figure. But investment and management decisions must read further, through to profit and cash flow.