RevPAR

RevPAR (revenue per available room) is a hotel’s rooms revenue, net of VAT, for a given period divided by the number of rooms available over the same period. It captures both how full the hotel is and the price it achieves in a single figure: it equals the occupancy rate multiplied by the average daily rate.

Calculation

• RevPAR = net rooms revenue ÷ rooms available
• RevPAR = occupancy rate × average daily rate

A fictitious, rounded example: a 40-room hotel open all year has 14,600 room nights available (40 × 365). It sells 10,220 of them, an occupancy rate of 70%, for rooms revenue of €1,226,400 net of VAT, an average daily rate of €120. Its RevPAR is €1,226,400 ÷ 14,600 = €84, or 70% × €120 = €84.

Rooms revenue normally excludes breakfast, tourist tax and ancillary services. The convention used should always be stated: without it, two RevPAR figures cannot be compared.

In a transaction

RevPAR is one of the first figures a buyer recalculates. In a teaser or an information memorandum it is shown over several financial years and on a rolling twelve-month basis, and cross-checked: occupancy multiplied by average daily rate must match the RevPAR reported. It positions the hotel against its competitive set and helps assess the case for repositioning. A RevPAR below the local market may point to weak distribution as much as to a weakness in the asset.

Not to be confused with

• TRevPAR (total revenue per available room), which includes all revenue: food and beverage, meetings, wellness.
• GOPPAR, which divides GOP by rooms available and measures profitability, not just revenue.

A high RevPAR says nothing about margins: read it alongside EBE, the French measure of EBITDA.

For a valuation built on these indicators: hotel valuation.