"We were 90% full in August." It is the first line in every conversation about the season, at the café, at the hoteliers' association, at the accountant's. It sounds good. The next question matters more, though: at what rate?
Occupancy alone does not say how much money a property made. Two hotels with the same rooms can have very different occupancy and almost the same income, or the opposite. To see it you need three numbers: occupancy, ADR and RevPAR. A property management system calculates them for you, but it pays to know what each one means.
Occupancy: how many rooms you sold
Occupancy is the share of available room nights that were sold.
Occupancy = room nights sold ÷ room nights available
A property with 10 rooms has 10 × 31 = 310 available room nights in August. If it sells 279, occupancy is 279 ÷ 310 = 90%.
Occupancy tells you whether your rate matched demand. Very high occupancy very early usually means the rate was low. Low occupancy in a period with demand means something else went wrong: the rate, the minimum stay, availability on the channels.
ADR: how much you sold each room for
ADR (Average Daily Rate) is the average price per room night sold.
ADR = room revenue ÷ room nights sold
If the 279 nights brought in €27,900, ADR is €27,900 ÷ 279 = €100.
ADR tells you how much you sell for, not how often. It rises when you raise rates, sell more expensive rooms or give fewer discounts. On its own it misleads too: a room sold for one night at €300 gives a high ADR and an empty till.
RevPAR: what each available room earned
RevPAR (Revenue Per Available Room) brings the two together. It is room revenue spread over all available nights, sold and empty.
RevPAR = room revenue ÷ room nights available, or RevPAR = ADR × occupancy
In our example: €27,900 ÷ 310 = €90. Or €100 × 90% = €90. The same number both ways.
RevPAR is the number that compares best month to month, year to year and between properties of different sizes, because it accounts for both the rate and the empty rooms.
An example: two hotels, one August
Two neighbouring properties, 10 rooms each, 310 available nights in August. The numbers are illustrative.
- Hotel A: sold 279 nights for €27,900. Occupancy 90%, ADR €100, RevPAR €90.
- Hotel B: sold 233 nights for €29,125. Occupancy about 75%, ADR €125, RevPAR about €94.
A had 15 points more occupancy and won the conversation at the café. B made €1,225 more, with 46 fewer nights. Forty-six fewer nights of cleaning, electricity, water, supplies and wear. B did not have a better year because it was full. It had a better year because it sold at a higher rate and left few rooms empty.
This does not mean low occupancy is the goal. It means occupancy and rate must be looked at together. If A had raised its August rate by €10 and lost only a few bookings, its RevPAR would have gone up.
What counts as "revenue"
For the numbers to mean anything, always measure the same way. Room revenue usually leaves out taxes and fees you simply collect for the state, such as the resilience fee. Some owners count breakfast and extras separately. What matters is not to compare one month with taxes and another without.
Where to see them without calculating
In Bookmatrix.com, the Analytics page shows, for any period you pick, total revenue, occupancy, ADR, RevPAR, the number of stays and the average length of stay, compared with the same period last year. Internal-use rooms do not count towards available nights. The income-per-day report shows occupancy and ADR for each day, so you can see which weeks held you back.
In Bookmatrix.com the revenue on the dashboard is the charges of the stays in the period. If you compare it with figures from your accountant, make sure you are measuring the same thing.
If you still count bookings in a notebook, these three numbers take hours with a calculator. See the comparison notebook or Bookmatrix.com. And for how net income per booking goes up without changing the rate, see commission-free bookings.
Frequently asked questions
What is RevPAR?
Room revenue for a period divided by all available room nights, sold and empty. It equals ADR × occupancy.
What is the difference between ADR and RevPAR?
ADR divides revenue only by the nights sold, so it shows the average rate. RevPAR divides it by all available nights, so it shows both the rate and the empty rooms.
Which number matters most?
None on its own. If you must look at one, RevPAR, because it combines the other two. Then look at occupancy and ADR to understand what moved it up or down.
How often should I look at them?
Once a month in season, per month and compared with the same period last year. In winter, before you set the new rates, for the whole previous season.
Want to see the three numbers for your own property? Try Bookmatrix.com free for 14 days at bookmatrix.com/demo, or leave your details at bookmatrix.com/form and we will call you on the next working day. Phone: +30 2351 151525.