What Is RevPAR? The Hotel Revenue Metric to Measure Hotel Performance

Revenue per Available Room (RevPAR) is the hospitality industry’s go-to metric for hotel profitability—a single number that reveals whether you’re winning the balancing act between occupancy and room rates. But beyond the calculation lies a bigger question: Is your RevPAR strategy leaving money on the table? Let’s break down how this metric works, why it’s critical for your bottom line, and how to turn insights into action.

What Is RevPAR? The Hotel Revenue Metric That Unlocks Profit Potential

At its core, RevPAR measures how effectively you're monetizing your most valuable asset, your rooms. While a healthy RevPAR signals strong performance, many hoteliers miss its hidden power: it's both a report card and a roadmap. By analyzing RevPAR trends alongside data like booking pace and competitor rates, you gain the power to predict demand shifts, adjust pricing in real-time, and ultimately, turn empty rooms into profit centers.

RevPAR Explained: The Basics

RevPAR calculates how effectively a hotel fills its rooms and monetizes them. It answers two critical questions:

Are you maximizing occupancy? Are you pricing rooms optimally?

You can calculate RevPAR two ways:

Total Room Revenue ÷ Total Available Rooms
Average Daily Rate (ADR) × Occupancy Rate

Example: A 100-room hotel with 70% occupancy and $150 ADR has a RevPAR of $105. Discover more about ADR—read more on our latest blog: What is ADR (Average Daily Rate) And Why It Matters.

Why RevPAR Matters More Than Occupancy or ADR Alone

While occupancy and ADR are useful, RevPAR reveals the bigger picture:

High occupancy + low ADR? You’re filling rooms but leaving money on the table.
High ADR + low occupancy? Premium pricing might be costing you bookings.
RevPAR growth signals balanced success in both areas.

3 Ways to Improve Your RevPAR

Dynamic Pricing: Adjust rates based on demand, seasonality and competitor pricing.
Upsell Strategically: Offer room upgrades or packages to boost ADR without new guests.
Target the Right Guests: Use data to attract higher-value segments (e.g., business travelers during weekdays).

The RevPAR Catch: It’s Not the Full Story

RevPAR ignores operational costs. A hotel with high RevPAR but thin profit margins might still struggle. Pair it with metrics like:
TRevPAR (Total Revenue Per Available Room) – Captures ancillary spending (F&B, spa, etc.).
GOPPAR (Gross Operating Profit Per Available Room) – Factors in costs.

While RevPAR tracks room revenue, TRevPAR reveals your total profit potential. Discover how to capture every dollar—from F&B to spa—in our guide: Beyond RevPar: What Is TRevPar And How To Optimize It

How FPG Helps Hotels Drive RevPAR

For 30+ years, FPG has helped 2,500+ hotels (including Marriott and Hilton) optimize RevPAR through the IN-Gauge platform. By combining technology and training, FPG empowers hotels to boost RevPAR by 3–6% through staff-led upselling—turning service teams into revenue drivers. We deliver happier guests, higher RevPAR, and measurable profit growth with zero CapEx. Transforming potential into profit at every touchpoint.

FPG teaches frontline teams how to build genuine rapport, use assumptive language and ask the right questions, which can transform the guest experience. The result leads to higher customer satisfaction and the ability to command 15-20% higher prices. For hotels that haven’t embraced FPG’s program, this untapped revenue is often just ‘money left on the table.’