What is RevPAR and why should you look at this indicator to improve your hotel's profits?
In the hotel industry, the Revenue per Available Room (RevPAR) is a key metric that allows hotels to know how much revenue they earn per available room, whether occupied or not. Unlike other metrics that measure only occupancy or average revenue, RevPAR reflects a hotel's true performance by combining both elements. A high RevPAR indicates that both rates and occupancy are being maximised, a clear indication that the revenue strategy is working.
Understanding and improving RevPAR is key to achieving the desired profitability and making strategic decisions that allow your hotel to stand out in an increasingly competitive market. In this article, we will look at why this indicator is so important, how it is calculated and what are the most effective strategies to improve your hotel's RevPAR, with a special focus on the advantages of a property management system (PMS) as a key tool in this process.

Meaning of Revenue per Available Room (RevPAR)
The RevPARwhich literally means "revenue per available room", represents a complete picture of the hotel's performance in terms of occupancy and rate. In other words, it focuses not only on how much a room costs (such as ADR or average daily rate), but also on how many of those rooms are actually generating revenue.
For hotel managers, high RevPAR is not only synonymous with high occupancy, but also with optimal rates that maximise revenue per room. This helps hotels identify opportunities for improvement and implement pricing strategies that attract more guests at a competitive and profitable rate. This metric is a reliable and essential reference for designing a balanced revenue strategy.
How do I calculate my RevPAR and what is the formula?
To calculate the RevPAR of your hotel, there are two methods that offer equal results and allow you to easily monitor this indicator:
1. Total room revenue / Number of rooms available
This method considers the revenue generated by rooms only, regardless of whether they are occupied or not. It is particularly useful for measuring the performance of each room in periods of high and low occupancy.
2. Average Daily Rate (ADR) x Occupancy Rate
In this case, you multiply the average daily rate of your occupied rooms by the occupancy percentage. This calculation provides a quick visualisation of how ADR and occupancy interact to produce revenue.
Both formulas allow for daily or monthly monitoring and the detection of important trends. For example, if occupancy decreases but RevPAR remains the same, it could indicate that rates are balanced to maximise revenue. The frequency with which this calculation is performed can be adjusted to the needs of each hotel, but it is important to maintain a constant analysis to anticipate changes in demand and adjust rates.

6 ways to improve the RevPAR of your hotel
Improving RevPAR depends on a combination of smart strategies, ranging from price adjustments to optimising distribution channels. Here are six practical ways to achieve optimal and sustainable RevPAR in your hotel.
1. Adjust your tariffs dynamically
Implement a system of Revenue Management is essential to adapt rates in real time according to demand and events that affect occupancy. Dynamic pricing allows you to take full advantage of peak seasons and adjust prices during low demand without losing revenue. For example, during local events, your dynamic rate system can adjust rates based on expected high demand, thereby increasing revenue without the need to fill all rooms.
A PMS with integration to an advanced Revenue Management system allows you to automate these rate adjustments based on real data, optimising pricing in real time and saving you time in constantly monitoring rates and occupancy.
2. Optimise the distribution channel
Choosing the right distribution channels has a direct impact on RevPAR. Although OTAs (Online Travel Agencies) can provide visibility, they also carry a high commission. Therefore, reducing the dependence on intermediaries and encouraging the use of OTAs can have a direct impact on RevPAR. direct bookings through the hotel's website or specific marketing campaigns can be very cost-effective.
In addition, leveraging your direct channel to create exclusive promotions, loyalty programmes or additional benefits for guests who book through your website is a great way to increase occupancy and ADR.
3. Improve the guest experience
Guests who perceive exceptional service are willing to pay more and return, which translates into better RevPAR. Investing in customer experience improvements The use of these services - such as room décor, additional amenities or special packages (such as romantic dinners or spa experiences) - increases guest satisfaction and justifies higher rates.
In addition, a satisfied guest not only tends to pay more, but also leaves positive feedback, which attracts other travellers and encourages direct bookings. A PMS with options to personalise the guest experience makes it easier to track preferences and provide a more personalised service, which has a favourable impact on RevPAR.
4. Implement upselling and cross-selling
The upselling and cross-selling are strategies to increase average revenue per guest without necessarily increasing occupancy. Offering room upgrades, additional services (such as spa access or transportation services) or dining packages during booking or at check-in can generate additional revenue.
A PMS that facilitates upselling and cross-selling, allowing you to offer these services directly to the guest, makes it easier to manage these opportunities without cluttering the booking experience.
5. Take advantage of early bookings and exclusive promotions.
The advance bookings and the long stay promotions secure future revenue, which helps maintain cash flow and fill rooms in off-peak seasons. These promotions allow the hotel to maintain consistent occupancy and offer attractive discounts that guests value.
6. Constantly analyse the market and the competition
Continuous competitor and market analysis is vital to identify opportunities and adjust your pricing. Knowing your competitors' pricing strategies in real time, especially during local events, allows you to adapt your rates and booking conditions quickly.
3 useful complementary formulas to RevPAR
There are other key metrics that complement RevPAR and provide a broader perspective on hotel performance and profitability. These indicators are important to analyse not only occupancy and room revenue, but also total revenue and profitability margin.
GOPPAR (Gross Operating Profit per Available Room)
The GOPPAR measures the gross operating profit per available room, providing a more detailed view of the hotel's profitability. This metric is useful for understanding revenue in relation to operating costs and can help identify areas for improvement in expense management.
TRevPAR (Total Revenue per Available Room)
The TRevPAR measures the total revenue per available room, including all services offered by the hotel (restaurant, spa, events, etc.). This metric provides a complete view of the hotel's performance and allows you to evaluate strategies to increase revenue in all areas.
ADR (Average Daily Rate)
The ADR or average daily rate, measures the average revenue per occupied room and is calculated by dividing room revenue by rooms sold. Comparing ADR with RevPAR allows you to identify whether room rates are optimised or if adjustments are needed.
How does our PMS help to improve and increase your RevPAR?
At LEAN Hotel SystemWe understand the importance of maximising RevPAR to succeed in a competitive market. From our platform, you can directly access essential RevPAR data, allowing you to monitor and adjust this key indicator in real time.
Our detailed occupancy and ADR reports allow you to identify patterns. In addition, LEAN offers integration with advanced systems for Revenue Management, Channel Managerwhich facilitates rate adjustments based on market demand and competitive trends. With LEAN, every strategy to improve RevPAR is at your fingertips, achieving superior performance and profitable, strategic hotel management.
