Portfolio Risk & Leases

Revenue Per Available Room (RevPAR) Explained

Quick Definition

Revenue Per Available Room (RevPAR): Revenue Per Available Room (RevPAR) is the premier operating performance metric for Hotel and Lodging REITs, calculated by multiplying an asset's Average Daily Rate (ADR) by its occupancy rate.

Institutional Analysis & Context

RevPAR reflects a hotel property's pricing power and operational efficiency simultaneously. Because lodging leases turn over every 24 hours, RevPAR provides real-time sensitivity to macroeconomic consumer spending and corporate business travel cycles.

Formula & Calculation Breakdown

RevPAR = Average Daily Rate (ADR) × Occupancy Rate (%) = Total Room Revenue / Total Available Rooms
Metric Component Definition & Application
Average Daily Rate (ADR) Average rental revenue earned per occupied room per day
Occupancy Rate Percentage of total available hotel rooms occupied by paying guests

Real-World Calculation Example

A luxury resort operated by Host Hotels (HST) has an ADR of $350 and operates at 76% occupancy. Its RevPAR is $350 × 0.76 = $266.00 per room night.

Flagship REITs Exemplifying This Metric

Analyze how top public REITs perform across this dimension in the live market:

HST Profile →RHP Profile →PK Profile →SHO Profile →PEB Profile →

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Frequently Asked Questions

Why is RevPAR better than Average Daily Rate alone?

Because an operator could charge an exorbitant room rate that results in empty rooms. RevPAR accounts for whether rooms are actually occupied.

How quickly do hotel REITs react to inflation?

Faster than any other real estate sector because room rates are re-priced on a daily 24-hour cycle rather than multi-year lease terms.

What is TrevPAR?

Total Revenue Per Available Room (TrevPAR) adds food and beverage, spa, conference, and resort fees to room revenue.