Reading hotel performance starts with knowing what each number measures. We consider occupancy, average daily rate, and revenue per available room together because each answers a different question about the same operation.
Occupancy shows the share of available room nights sold during a particular period. Average daily rate, usually called ADR, shows the average room revenue earned for each room night sold. Revenue per available room, or RevPAR, spreads room revenue across the available room inventory, including unsold room nights.
Occupancy = room nights sold ÷ available room nights × 100.
ADR = room revenue ÷ room nights sold.
RevPAR = room revenue ÷ available room nights.
ADR and RevPAR use room revenue. Restaurant sales and other hotel income belong in separate revenue categories. Metric definitions: CoStar STR Benchmark glossary.
A meaningful comparison uses the same reporting period and a consistent approach to room inventory. For a monthly report, we calculate the ratios from the month’s total revenue and room nights. Taking a simple average of daily percentages or daily rates can give a misleading result when the underlying room counts differ. The same principle applies when combining results across properties.
The relationship between occupancy and ADR helps explain changes in RevPAR. If occupancy rises while ADR falls, a greater share of available inventory is selling at a lower average price. The effect on RevPAR depends on the size of both changes. A higher ADR accompanied by lower occupancy deserves the same careful review.
We also consider what it takes to earn that revenue. Distribution commissions, labor, supplies, and property upkeep affect operating results. Room condition and guest feedback help explain whether the experience supports the rate being charged.
A useful review connects the figures to decisions. Which dates need attention? Is demand coming from different guest segments? Are repairs affecting room availability? Does the team have the staffing and supplies needed for the business already booked?
The purpose of the report is to help us ask better questions and choose actions that fit the property.
Metric definitions: CoStar STR Benchmark glossary ↗