RevPAR, ADR, occupancy, GOPPAR and the benchmark indices — how to calculate and read them. 9 questions, with the answer first and the working after it.
What is RevPAR and how do I calculate it?
RevPAR (revenue per available room) is rooms revenue divided by the number of available rooms for a period. It blends how full you are with how much you charge into one number. Example: 100 rooms, 70 sold at $200 average rate, gives $14,000 rooms revenue and a RevPAR of $140. You can also calculate it as ADR multiplied by occupancy.
The formula is RevPAR = Rooms Revenue / Rooms Available. Rooms available is your total sellable rooms times the number of nights in the period — a 100-room hotel over 30 days has 3,000 available room nights. Divide the period rooms revenue by that figure and you get RevPAR. The equivalent shortcut is RevPAR = ADR x Occupancy.
RevPAR matters because it defends against two false comforts. You can push occupancy to 100% by slashing rates and still earn less than a competitor at 75%; you can hold a high ADR while running half empty. RevPAR captures the trade-off, which is why it is the single most-watched top-line metric in revenue management.
The limitation: RevPAR ignores cost. It counts every dollar of rooms revenue the same, whether it came direct at low cost or via a 20% OTA commission. It also ignores non-room spend. That is why NRevPAR (net of acquisition cost) and GOPPAR (profit-based) exist as companions, not replacements.
ADR (average daily rate) is the average price you actually earned per sold room over a period: rooms revenue divided by rooms sold. It excludes unsold rooms and usually excludes tax and non-room charges. Example: $14,000 rooms revenue from 70 sold rooms gives an ADR of $200. ADR tells you how much you charge, not how full you are.
The formula is ADR = Rooms Revenue / Rooms Sold. Note the denominator: it is rooms sold, not rooms available. That is the key difference from RevPAR. ADR answers, when I sell a room, what do I get for it? A hotel selling 70 of 100 rooms at $200 has an ADR of $200 and a RevPAR of $140.
ADR is the cleanest read on pricing power and rate positioning. Rising ADR at steady occupancy usually means healthy demand or a successful rate strategy; falling ADR to chase occupancy can quietly erode revenue. Watch ADR and occupancy together — moving one at the expense of the other is the central tension of pricing.
Be careful comparing ADR across hotels or segments: an OTA-heavy book carries a lower net ADR after commission than the gross figure suggests, and complimentary or house-use rooms are normally excluded from the calculation. Always confirm what is in and out of the rooms-sold count before drawing conclusions.
ADR divides rooms revenue by rooms sold; RevPAR divides rooms revenue by rooms available. ADR measures price only — what you earn per occupied room. RevPAR blends price and occupancy into one number. A hotel can have a high ADR and a weak RevPAR if it runs half empty. RevPAR equals ADR multiplied by occupancy.
The single difference is the denominator. ADR = Rooms Revenue / Rooms Sold. RevPAR = Rooms Revenue / Rooms Available. Because available rooms is always equal to or greater than sold rooms, RevPAR is always equal to or lower than ADR. When a hotel sells out, ADR and RevPAR are the same number; the emptier it runs, the wider the gap.
Worked example: 100 rooms, 60 sold at $250. ADR is $250. RevPAR is 60 x 250 / 100 = $150. Now compare a hotel selling 90 rooms at $180: lower ADR ($180) but higher RevPAR ($162). The second hotel earns more per available room despite charging less — which is exactly the insight RevPAR is built to reveal.
Use ADR to judge pricing and rate strategy; use RevPAR to judge overall rooms performance and to compare periods or properties fairly. Neither accounts for cost or non-room revenue, so pair them with GOPPAR or TRevPAR when profit, not just top line, is the question.
There is no universal good RevPAR — it depends entirely on your market, class, and season, so the honest answer is a comparative one. A good RevPAR is one that beats your own prior period and grows your share of the comp set (an RGI above 100). A luxury resort’s healthy RevPAR can be ten times a budget motel’s.
Absolute RevPAR numbers only mean something inside a context. A $95 RevPAR could be excellent for an economy property in a small town and poor for an upscale city hotel. Chasing a headline figure you read somewhere is a trap; the useful comparisons are against your budget, against the same date last year, and against your competitive set.
The cleanest good test is the Revenue Generation Index (RGI): your RevPAR divided by the comp set RevPAR, times 100. Above 100 means you are capturing more than your fair share of market revenue; below 100 means less. Growing RGI over time is a stronger sign of health than any single RevPAR value.
Also read RevPAR in the context of profit. A RevPAR lifted by high-commission OTA business may look strong yet convert poorly to the bottom line. Directionally, aim for RevPAR growth driven by rate rather than deep discounting, and confirm it with NRevPAR or GOPPAR before celebrating.
GOPPAR (gross operating profit per available room) is gross operating profit divided by available rooms for a period. Unlike RevPAR, which counts revenue, GOPPAR counts profit — revenue minus operating costs — so it reflects how efficiently the whole hotel converts rooms into earnings. It is the metric owners and investors care about most because it maps to the bottom line.
The formula is GOPPAR = Gross Operating Profit / Available Rooms. Gross operating profit is total revenue (all departments) minus operating expenses, before fixed costs like rent, insurance, and financing. Example: a 100-room hotel earning $9,000 gross operating profit on a given night has a GOPPAR of $90. Over a month, divide the period profit by available room nights.
GOPPAR beats RevPAR at answering, are we actually making money? A revenue push through expensive channels or heavy discounting can raise RevPAR while GOPPAR stagnates or falls. Because it includes all departments and costs, GOPPAR rewards total revenue management and cost discipline, not just a full house.
The trade-off is that GOPPAR needs full profit-and-loss data, so it is usually calculated monthly rather than daily, and it is harder to benchmark because cost structures vary. Most teams watch RevPAR daily for direction and review GOPPAR monthly to confirm the revenue is converting to profit.
Occupancy rate is the share of your available rooms that are sold: rooms sold divided by rooms available, as a percentage. Example: 70 of 100 rooms sold is 70% occupancy. A good rate depends on your rate strategy — running 95% every night often means you are underpricing. Most hotels optimise for revenue, not for a full house.
The formula is Occupancy = Rooms Sold / Rooms Available x 100. It is the simplest demand gauge and the oldest, but on its own it is misleading. You can hit 100% by giving rooms away, or sit at 65% while earning more per available room through rate. That is why occupancy is always read alongside ADR and RevPAR.
There is no single good number. City-centre hotels may run 75 to 85% annually; resorts swing widely by season; a healthy budget property might sit higher. The revenue-management insight is that the last few points of occupancy are the most expensive to fill and often not worth the rate you must drop to get them.
Watch for the underpricing signal: if you consistently sell out well before arrival, your rates for those dates were probably too low and you left money on the table. Persistent 100% is rarely a trophy — it usually means demand outran your pricing. The goal is the occupancy-and-rate mix that maximises RevPAR.
TRevPAR (total revenue per available room) is total hotel revenue — rooms plus food and beverage, spa, parking, and every other outlet — divided by available rooms. Where RevPAR captures only rooms, TRevPAR captures the full spend a guest generates. It is the headline metric of total revenue management and often reveals value that room rate alone misses.
The formula is TRevPAR = Total Revenue / Available Rooms. Total revenue means every department, not just rooms. Example: a 100-room hotel earning $14,000 in rooms plus $6,000 across restaurant, bar, and parking on a night has $20,000 total revenue and a TRevPAR of $200, versus a rooms-only RevPAR of $140.
TRevPAR matters most for hotels with meaningful non-room revenue — resorts, conference hotels, full-service properties. Two hotels with identical RevPAR can have very different TRevPAR if one drives strong outlet spend. It reframes guest value: a lower room rate that brings a high-spending guest can beat a higher rate that does not.
The caveat is that TRevPAR is still a revenue metric, not a profit one — outlets like food and beverage often run thin margins, so high TRevPAR does not automatically mean high profit. Pair it with GOPPAR to see whether the extra revenue actually reaches the bottom line.
ARI, MPI and RGI are the three performance indices that compare your hotel to its comp set. MPI (Market Penetration Index) compares occupancy, ARI (Average Rate Index) compares ADR, and RGI (Revenue Generation Index) compares RevPAR. Each is your figure divided by the comp set figure, times 100. Above 100 means you are outperforming the market on that measure.
MPI = your occupancy / comp set occupancy x 100. It tells you whether you are winning a share of demand. Example: your 70% against a comp set 65% gives an MPI of 108 — you are filling more of your rooms than the market, on a like-for-like basis.
ARI = your ADR / comp set ADR x 100. It shows rate position. An ARI of 111 means you charge about 11% more than the set on average. RGI = your RevPAR / comp set RevPAR x 100, and it is the one that matters most because it blends the other two into fair share of revenue.
Read them together. High MPI with low ARI means you are buying occupancy with rate — full, but cheap. High ARI with low MPI means you are priced above the market and losing volume. The healthiest pattern is RGI above 100 driven by balanced rate and occupancy, not by leaning hard on either one.
NRevPAR (net revenue per available room) is RevPAR after subtracting the cost of acquiring the booking — OTA commissions, travel-agent fees, and other distribution costs — then dividing by available rooms. It shows how much rooms revenue you actually keep. A booking with a high rate but a 20% commission can have a lower NRevPAR than a cheaper direct booking.
The formula is NRevPAR = (Rooms Revenue - Distribution Costs) / Available Rooms. Distribution costs include OTA commissions, GDS fees, wholesaler margins, and channel costs. It corrects RevPAR’s biggest blind spot: RevPAR treats a $200 direct booking and a $200 OTA booking as identical, even though the OTA one might cost you $30 to $50 in commission.
Worked example: two rooms both sell at $200. One is direct (near-zero cost), one via an OTA at 18% commission ($36). Their combined rooms revenue is $400, but net is $364. As OTA mix rises, the gap between RevPAR and NRevPAR widens — which is the quantified case for a direct-booking strategy.
NRevPAR is the bridge between top-line RevPAR and profit-based GOPPAR. It is especially useful when comparing channels or deciding how much to invest in direct bookings: if shifting a point of occupancy from OTA to direct lifts NRevPAR, the channel shift is paying for itself.
