ADR measures price, occupancy measures usage, and RevPAR combines both. None of the three measures profit on its own. To evaluate commercial performance, RevPAR is usually more useful than looking at just ADR or occupancy; to assess profitability, you also need costs and margin.
ADR
ADR = Accommodation Revenue ÷ Nights Sold.
It tells you how much you earn on average per occupied night.
Occupancy
Occupancy = Nights Sold ÷ Nights Available × 100.
It tells you what percentage of your available inventory you manage to sell.
RevPAR
RevPAR = Accommodation Revenue ÷ Nights Available.
It can also be approximated as ADR × occupancy expressed in decimal.
ADR: €200 · Occupancy: 60%.
RevPAR = 200 × 0.60 = €120.
Two Properties Can Have the Same RevPAR in Very Different Ways
| Property | ADR | Occupancy | RevPAR |
|---|---|---|---|
| A | €150 | 80% | €120 |
| B | €240 | 50% | €120 |
Commercially, they produce the same income per available night. However, their cleaning structure, wear and tear, management, and positioning can make the profit very different.
Which Metric to Use for Each Question
| Question | Main Metric |
|---|---|
| Am I selling too high or too low? | ADR |
| Am I filling the calendar? | Occupancy |
| Am I monetizing my inventory well? | RevPAR |
| Am I making money? | Margin / profit / cash |
The Most Common Mistake
Celebrating an increase in occupancy without checking if the ADR dropped too much. Or celebrating a high ADR while the calendar remains empty.
RevPAR is useful for reading commercial performance; margin is useful for reading financial health.
If you want to know if the business is improving, look at the four layers: ADR, occupancy, RevPAR, and net profit.
Methodology
The formulas are standard metrics of revenue management. Gatavia adds a fourth layer: cost and margin, because RevPAR does not account for commissions or expenses.
Gatavia · More clarity. More time. More life.
Do Gatavia Check and review income, costs, and margin with your figures.