Chapter 15 · Day 15 — Hotels and manufacturing
Hotels: occupancy, ADR and RevPAR
Three numbers describe a hotel's trading. RevPAR is the one that cannot be gamed by discounting.
16 of 30 · 11 min
A hotel sells a perishable product — an unsold room tonight is revenue that can never be recovered. Three metrics describe it.
| Metric | Formula |
|---|---|
| Occupancy rate | Occupied rooms ÷ Available rooms × 100 |
| ADR (average daily rate) | Room revenue ÷ Rooms sold |
| RevPAR | Room revenue ÷ Available room nights, or ADR × Occupancy |
Worked — Illustrative Example
A 180-room hotel over a 365-day year. Available room nights = 180 × 365 = 65,700. Rooms sold = 41,000. Room revenue = Rs 34,85,00,000.
- Occupancy = 41,000 ÷ 65,700 × 100 = 62.4%
- ADR = 34,85,00,000 ÷ 41,000 = Rs 8,500
- RevPAR = 34,85,00,000 ÷ 65,700 = Rs 5,304 (check: 8,500 × 0.624 = Rs 5,304)
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