Hotel numbers · 6 min read
ADR, RevPAR and occupancy explained, with naira examples
Short answer: Occupancy is rooms sold divided by rooms available. ADR is room revenue divided by rooms sold. RevPAR is room revenue divided by rooms available, which is the same as occupancy times ADR. RevPAR is the fairest single measure, because it rewards neither empty rooms nor cheap ones.
By the Biodux teamUpdated
Three numbers tell you most of what you need to know about how your rooms are doing: occupancy, ADR and RevPAR. They’re simple to calculate, and most hotel software prints them every morning. The trick is knowing which one to look at.
Occupancy
Occupancy = rooms sold ÷ rooms available
If you have 60 rooms and sold 45 last night, your occupancy was 45 ÷ 60 = 75%.
Rooms out of order shouldn’t count as available. If 2 of your 60 rooms were being repaired, you had 58 to sell, and 45 sold is about 78%.
Occupancy tells you how full you were. It doesn’t tell you whether you made money.
ADR (average daily rate)
ADR = room revenue ÷ rooms sold
If those 45 rooms brought in ₦2,250,000, your ADR was ₦2,250,000 ÷ 45 = ₦50,000.
ADR tells you what guests actually paid, after corporate rates, agent discounts and promotions. It’s often well below your rack rate, and the gap is worth watching.
RevPAR (revenue per available room)
RevPAR = room revenue ÷ rooms available
Same night: ₦2,250,000 ÷ 60 rooms = ₦37,500.
You can also get there by multiplying occupancy by ADR: 75% × ₦50,000 = ₦37,500.
RevPAR is the one to watch, because you can’t cheat it. Fill the hotel by slashing rates and occupancy goes up while ADR falls. Hold rates high and leave rooms empty and ADR looks great while occupancy suffers. RevPAR only goes up when the balance is right.
A worked example: should you discount?
Say your 60-room hotel normally does this on a weekday:
| Before discount | After 20% discount | |
|---|---|---|
| Rooms sold | 36 | 44 |
| Occupancy | 60% | 73% |
| ADR | ₦50,000 | ₦40,000 |
| Room revenue | ₦1,800,000 | ₦1,760,000 |
| RevPAR | ₦30,000 | ₦29,333 |
The discount filled eight more rooms, and the hotel looks busier. But RevPAR went down, so room revenue fell. And eight more rooms means more housekeeping, laundry and breakfast cost.
The discount only makes sense if those extra guests spend enough in your restaurant and bar to make up the difference. That’s why it helps to see outlet revenue next to rooms revenue on the same report.
Which one should you watch?
- Watch occupancy to plan staffing, housekeeping and breakfast.
- Watch ADR to see whether discounts and corporate rates are creeping too low.
- Watch RevPAR to judge whether a pricing decision worked, and to compare one month, or one hotel, against another.
Compare each one with the same day last week, the same month last year, and month to date. A single night on its own tells you very little.
Getting these numbers without a calculator
If you’re working these out by hand, the figures will always be a day late and occasionally wrong. In Biodux PMS, the Night Auditor’s Report shows rooms available, occupied, revenue, average rate and RevPAR by room type, and the Manager’s Flash Report shows occupancy, ADR and RevPAR for today, month to date and year to date. See night audit and reports for the full list, or look up any term in our glossary.