Hotel reporting has a lot of acronyms, but for a small property three numbers do most of the work: occupancy, ADR and RevPAR. Each answers a different question, and each one on its own can tell you a comforting story that isn't true.
If you just want the numbers for your own property, the free ADR, occupancy and RevPAR calculator does the arithmetic. This post is about what to do with them.
The three definitions, in plain language
Occupancy — how full you were. Room-nights sold divided by room-nights available.
ADR (Average Daily Rate) — what you charged, on average, for the nights you actually sold. Room revenue divided by room-nights sold.
RevPAR (Revenue Per Available Room) — what each room earned you, on average, across every night it was available, sold or not. Room revenue divided by room-nights available. It works out to the same thing as ADR multiplied by occupancy.
A "room-night" is one room for one night. A 4-room guesthouse open for a 30-day month has 120 available room-nights, whether you sold 10 of them or all 120.
A worked example
Take that 4-room guesthouse over a 30-day month:
- Room-nights available: 4 rooms × 30 days = 120
- Room-nights sold: 84
- Room revenue for the month: ₹2,52,000
Then:
- Occupancy = 84 ÷ 120 = 70%
- ADR = 2,52,000 ÷ 84 = ₹3,000
- RevPAR = 2,52,000 ÷ 120 = ₹2,100 (and 3,000 × 70% = 2,100, same number)
Why one number on its own misleads you
Suppose next month you drop your rate to fill the place, and you sell 108 room-nights at an average of ₹2,200. Occupancy jumps to 90%, which feels like a great month, you were busy every day. But revenue is 108 × 2,200 = ₹2,37,600, so RevPAR falls to ₹1,980. You worked harder, cleaned more rooms, and earned less.
Now flip it: you hold your rate at ₹3,500 and sell only 60 nights. ADR looks excellent, but revenue is ₹2,10,000 and RevPAR falls to ₹1,750. A high ADR on half-empty rooms is not a win either.
That's the whole reason RevPAR exists: it's the only one of the three that punishes you for both empty rooms and underpricing at the same time.
Which one to watch at small scale
For a property with a handful of rooms, a reasonable habit is:
- Watch RevPAR month to month as your single "is this getting better?" number.
- Read occupancy and ADR together to understand why RevPAR moved, did you fill more nights, or charge more for the ones you filled?
- Remember the costs RevPAR ignores. Every extra night sold means another cleaning and another set of linen, and RevPAR doesn't count any of that. A higher-occupancy month can bring in a little more revenue and still leave you with less once those costs are paid.
A few things that throw the numbers off
- Counting blocked or out-of-service rooms as available. If a room is being repaired for a week, the common convention is to leave those nights out of "available", otherwise your occupancy looks worse than the rooms you could actually sell. Whichever rule you pick, keep it the same every month.
- Mixing in non-room revenue. Breakfast, airport pickups and late-checkout fees are real money, but they aren't room revenue. Keep them out of these three numbers, or the comparison to last month stops meaning anything.
- Gross vs net of OTA commission. Decide whether you're measuring what the guest paid or what reached you after Booking.com or Airbnb took their cut, and stay consistent.
Getting the numbers without a spreadsheet
You can calculate all three by hand from a booking spreadsheet, the reservation spreadsheet template has the columns you'd need. Hostberg works them out automatically from the bookings you already record, on the analytics side of the product, so they're there whenever you look rather than at the end of the month.