HorecaHire
Hotel occupancy rate, ADR and RevPAR are three different ways to understand room sales. Occupancy measures the percentage of available room-nights sold; Average Daily Rate (ADR) measures average room revenue per room sold; Revenue per Available Room (RevPAR) combines revenue with available room-night inventory. This original HoReCaHire hotel KPI calculation guide uses transparent India-rupee examples, a monthly worksheet and a practical explanation for Front Office, Sales, Revenue Managers and hotel job applicants.
The three hotel formulas
| Metric | Formula | What it answers |
|---|---|---|
| Occupancy rate | Rooms sold ÷ rooms available × 100 | How much of the defined inventory sold? |
| ADR (Average Daily Rate) | Room revenue ÷ rooms sold | What was the mean realized room rate? |
| RevPAR (Revenue per Available Room) | Room revenue ÷ rooms available | How much room revenue came from each available room-night? |
| Cross-check | ADR × occupancy as a decimal = RevPAR | Do the numbers use compatible periods and denominators? |
CoStar/STR’s hotel benchmarking documentation uses these formulas and defines room revenue, rooms sold and available inventory for comparable reporting. Those definitions matter. Do not mix gross package revenue with net room-only revenue or occupied guest nights with paid room-nights. Complimentary rooms and out-of-order status can affect reporting under the applicable methodology and PMS configuration.
Worked hotel KPI example: 80 rooms for one day
Consider a fictional 80-room hotel with an accepted report denominator of 80 room-nights on a particular day. It sells 60 qualifying paid rooms and earns ₹3,00,000 of comparable room revenue. Occupancy = 60 ÷ 80 × 100 = 75%. ADR = ₹3,00,000 ÷ 60 = ₹5,000. RevPAR = ₹3,00,000 ÷ 80 = ₹3,750. The cross-check is ₹5,000 × 0.75 = ₹3,750. These figures are teaching data, not a real hotel’s performance.
| Input or result | Illustrative value | Calculation |
|---|---|---|
| Defined available rooms | 80 | Report inventory definition |
| Paid rooms sold | 60 | Confirmed sold room-nights |
| Room revenue | ₹3,00,000 | Defined room revenue only |
| Occupancy | 75% | 60 ÷ 80 × 100 |
| ADR | ₹5,000 | ₹3,00,000 ÷ 60 |
| RevPAR | ₹3,750 | ₹3,00,000 ÷ 80 |
Monthly occupancy, ADR and RevPAR worksheet
| Field | Input/derived formula | Audit question |
|---|---|---|
| Month and property | [Actual reporting period] | Every entry covers same date range? |
| Total saleable room-nights | [Verified available inventory sum] | OOO adjustment handled consistently? |
| Paid rooms sold | [Accepted sold room-night count] | Exclude duplicates/complimentary according to method? |
| Comparable room revenue | [Room-only amount under chosen standard] | Taxes/packages and refunds defined? |
| Occupancy % | Sold ÷ available × 100 | Consistent room-night denominator? |
| ADR | Room revenue ÷ sold | No division by zero? |
| RevPAR | Room revenue ÷ available | Cross-check ADR × occupancy decimal? |
| Exceptions and source | [PMS/finance report and reviewer] | What was corrected or excluded? |
A 30-day hotel calculation: don’t use only one room count
Suppose the fictional 80-room property has all 80 room-nights available each night for a 30-day period, yielding 80 × 30 = 2,400 available room-nights. If 1,800 qualifying room-nights sell and room revenue is ₹90,00,000, then occupancy = 1,800 ÷ 2,400 = 75%; ADR = ₹90,00,000 ÷ 1,800 = ₹5,000; RevPAR = ₹90,00,000 ÷ 2,400 = ₹3,750. An unsold night is still in the availability denominator when the chosen standard considers it saleable.
What happens when a room is Out of Order?
Under relevant PMS and benchmarking definitions, an approved out-of-order room may be excluded from available inventory. But systems can distinguish Out of Order from Out of Service and may have configurable status treatment. Reconcile the room-night denominator with the revenue department’s actual method rather than automatically subtracting every maintenance note. Changing the denominator can increase the reported occupancy percentage without selling a single additional room.
ADR versus RevPAR: why higher ADR is not always better
| Scenario | Rooms sold / available | ADR | RevPAR |
|---|---|---|---|
| A: higher rate, less demand | 40 / 80, 50% occupancy | ₹6,000 | ₹3,000 |
| B: moderate rate, more demand | 60 / 80, 75% occupancy | ₹5,000 | ₹3,750 |
Both cases use fictional identical 80-room daily inventory. In A, room revenue is 40 × ₹6,000 = ₹2,40,000; in B, 60 × ₹5,000 = ₹3,00,000. B has a lower ADR yet higher RevPAR because occupancy improves enough. Neither proves higher profit: variable room costs, commission, guest segments and total hotel revenue are separate.
Five common mistakes in hotel performance reports
- Using occupied guest counts instead of paid rooms sold when calculating ADR.
- Dividing a month’s revenue by one day’s room availability.
- Including restaurant, spa or unrelated packages in room revenue without the chosen standard’s treatment.
- Comparing rates before and after taxes or booking fees inconsistently.
- Reporting a higher occupancy percentage as proof of improvement without checking room blocks, inventory denominator and comparable dates.
How hotel departments should use these metrics
| Department | Useful application | Avoid |
|---|---|---|
| Revenue and Sales | Compare demand and room yield over matched date ranges | Using RevPAR as the only pricing objective |
| Front Office | Improve clean booking and room-status records | Calling every occupied room a paid sale |
| Finance | Reconcile room revenue definitions to PMS reporting | Mixing unrelated revenue categories |
| General Management | Interpret room KPIs alongside operating costs and guest service | Assuming RevPAR equals net profit |
| Hospitality job seeker | Explain the formulas in interviews with clear units | Memorizing a formula without understanding the denominator |
Hotel interview questions: three quick exercises
A hotel has 100 available rooms and 70 sold. What is occupancy?
70 ÷ 100 × 100 = 70%, assuming qualifying sold room-nights and the correct availability denominator.
Room revenue is ₹2,10,000 on 70 rooms sold. Calculate ADR.
₹2,10,000 ÷ 70 = ₹3,000 per sold room. If 100 rooms were available, RevPAR would be ₹2,10,000 ÷ 100 = ₹2,100.
Can RevPAR rise while occupancy falls?
Yes. If the room revenue from each room sold increases enough to offset fewer rooms sold, total room revenue per available room can rise. Show both metrics before drawing a conclusion.
How to interpret the data responsibly
Review a defined period, day-of-week mix, seasonality, contracted groups, distribution fees and guest quality. CoStar/STR market-share indexes (MPI/ARI/RGI) add competitive comparisons when reliable and appropriately licensed benchmark information exists; do not invent competitor performance or suggest that a simple three-metric spreadsheet is a full revenue-management system.
Related HoReCaHire hospitality resources
Compare General Manager duties, Front Office Executive responsibilities, Duty Manager operations and hotel meal-plan inclusions. Hotels may post a revenue or front-office vacancy.
FAQs
What is the formula for RevPAR?
Room revenue ÷ available room-nights, or ADR multiplied by occupancy expressed as a decimal, provided compatible definitions and dates are used.
Is 75% occupancy always good?
Not without context. Revenue, costs, segment, hotel type, location, season and comparable dates matter.
Is RevPAR a hotel profit metric?
No. It measures room revenue yield per available room-night, not net operating profit or cash flow.
Research source: CoStar/STR Benchmark FAQ and Glossary; NCHMCT Revenue Management and Artificial Intelligence educational material (2026). Figures, dates, case studies and operating recommendations are original HoReCaHire illustrations, not actual hotel revenue data.
