RevPAR and RevPAR index

In hotels and in vacation rentals

• Hotels: RevPAR is per available room-night, and RevPAR index is called RGI (revenue generation index), benchmarked against a comp set via STR (CoStar) data on a base of 100.
• Vacation rentals: the unit is the listing-night. The market is a set of comparable listings. Owner and maintenance blocks are removed from available nights. Some operators call it RevPAN (revenue per available night) or RevPAL (per available listing).

Formulas

• RevPAR = accommodation revenue ÷ available nights
• RevPAR = occupancy × ADR
• RevPAR index = your RevPAR ÷ market RevPAR
• RevPAR index = MPI × ADR index (decimal), or RGI = MPI × ARI ÷ 100 (hotel scale)

Worked example: hotel

A 100-room hotel in a 30-day month has 3,000 available room-nights. It sells 2,250 of them for $337,500 in room revenue.

• Occupancy = 2,250 ÷ 3,000 = 75%
• ADR = $337,500 ÷ 2,250 = $150
• RevPAR = $337,500 ÷ 3,000 = $112.50 (check: 0.75 × $150 = $112.50)

If the comp set’s RevPAR was $105, then RGI = $112.50 ÷ $105 × 100 = 107.1.

Worked example: vacation rental portfolio

Twelve 2-bedroom apartments in a 30-day month give 360 listing-nights. Owners blocked 20, leaving 340 available. They booked 238 nights for $47,600 in accommodation revenue, excluding cleaning fees.

• Occupancy = 238 ÷ 340 = 70%
• ADR = $47,600 ÷ 238 = $200
• RevPAR = $47,600 ÷ 340 = $140

The comparable market ran at 66% occupancy and $230 ADR, so market RevPAR = 0.66 × $230 = $151.80.

• RevPAR index = $140 ÷ $151.80 = 0.92
• MPI = 70 ÷ 66 = 1.06
• ADR index = $200 ÷ $230 = 0.87
• Check: 1.06 × 0.87 = 0.92

The portfolio filled more nights than the market but sold them 13% cheaper and earned 8% less per available night. The fix is rate, not demand. Closing the gap to an index of 1.00 is worth ($151.80 − $140) × 340 = $4,012 for the month. Run your own numbers in the RevPAR index calculator.

If the 20 blocked nights had been left in, occupancy would read 238 ÷ 360 = 66.1% and RevPAR $132.22. That is a 5.6% understatement that has nothing to do with pricing.

Same RevPAR, opposite problems

A and B earn almost the same per available night by opposite routes. A is underpriced and B is overpriced, and C beats both by 15-18%. This is why RevPAR, not occupancy or ADR alone, is the scorecard.

RevPAR vs ADR vs occupancy

ADR describes the nights you sold. Occupancy describes how many you sold. RevPAR combines them and charges you for every night left empty. Use RevPAR (and RevPAR index) to judge performance. Use ADR and occupancy (and their indices, ADR index and MPI) to diagnose it.

What is a good RevPAR?

A RevPAR figure is only good or bad relative to comparable properties on the same dates. $140 is excellent in one market and poor in another. That is why we judge by RevPAR index. Above 1.00 sustained across the year means you are out-earning the market. Below 0.95 for several months in a row on a sound comp set is worth investigating.

How to increase RevPAR (without wrecking occupancy)

1. Find the side of the gap. Split RevPAR index into MPI and ADR index.
2. Raise rates where you are full early. A high forward MPI 31-90 days out with an ADR index below 1.00 is the cheapest revenue available.
3. Discount late and shallow, not early and deep. Long, gradual curves that start about 60 days out avoid teaching guests to wait.
4. Use short minimum stays outside peaks. Guests filtering for 2-night stays cannot see a 4-night minimum.
5. Fill orphan nights. Allow 1-night stays only in single-night gaps, not on Friday or Saturday.
6. Check distortions first. Long stays, owner blocks and unverified rates can make a listing look better or worse than it is.

If you’d like this done across your whole portfolio, start with a free revenue audit.

TRevPAR, GOPPAR and RevPAR

TRevPAR adds non-room revenue (food, fees, extras) and GOPPAR uses gross operating profit. Hotels use both. Vacation rentals rarely do, because cleaning fees are mostly cost recovery and owners are paid on accommodation revenue.

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