ADR (Average Daily Rate) is total room revenue divided by rooms sold. Occupancy rate is rooms sold divided by rooms available. RevPAR (Revenue Per Available Room) is ADR multiplied by occupancy rate. RevPAR is the most important of the three because it measures how effectively a hotel is generating revenue from its total room inventory — combining both rate and occupancy into a single number.
Average Daily Rate (ADR)
ADR measures the average revenue earned per occupied room per day.
Formula: ADR = Total Room Revenue ÷ Rooms Sold
Example: A hotel earns 80,000 THB in room revenue on a night when 40 rooms are occupied. ADR = 80,000 ÷ 40 = 2,000 THB.
ADR tells you how much you are earning per room sold, but it does not tell you how many rooms you are selling. A hotel with a high ADR but low occupancy may be earning less total revenue than a hotel with a lower ADR and higher occupancy.
Occupancy Rate
Occupancy rate measures the proportion of available rooms that are sold on a given night.
Formula: Occupancy Rate = Rooms Sold ÷ Rooms Available × 100
Example: A 50-room hotel sells 35 rooms on a given night. Occupancy = 35 ÷ 50 × 100 = 70%.
Occupancy tells you how full the hotel is, but not how much revenue each room is generating. A hotel with 100% occupancy at very low rates may be less profitable than one with 70% occupancy at higher rates.
RevPAR (Revenue Per Available Room)
RevPAR combines ADR and occupancy into a single metric that measures how effectively a hotel is generating revenue from its total room inventory.
Formula (Method 1): RevPAR = ADR × Occupancy Rate
Formula (Method 2): RevPAR = Total Room Revenue ÷ Rooms Available
Example: ADR = 2,000 THB, Occupancy = 70%. RevPAR = 2,000 × 0.70 = 1,400 THB.
RevPAR is the most widely used performance metric in the hotel industry because it accounts for both rate and occupancy. It is used to compare performance over time and against competitors.
How the Three Metrics Work Together
| Scenario | ADR | Occupancy | RevPAR | Assessment |
|---|---|---|---|---|
| High rate, low occupancy | 3,000 THB | 50% | 1,500 THB | Rates may be too high |
| Low rate, high occupancy | 1,500 THB | 95% | 1,425 THB | Rates may be too low |
| Balanced | 2,000 THB | 75% | 1,500 THB | Good balance |
| Peak performance | 2,500 THB | 85% | 2,125 THB | Excellent |
Using These Metrics for Revenue Management
These three metrics are the foundation of hotel revenue management. Use them to:
- Track performance over time — compare this month's RevPAR against the same month last year
- Identify pricing opportunities — if occupancy is consistently above 85%, rates may be too low
- Evaluate rate changes — did a rate increase improve RevPAR or just reduce occupancy?
- Compare channels — which booking source generates the highest ADR?
- Set revenue targets — a RevPAR target is more useful than an occupancy target alone
See: Revenue Management for Independent Hotels.
Frequently Asked Questions
What is RevPAR in hotels?
RevPAR stands for Revenue Per Available Room. It is calculated by multiplying the occupancy rate by the Average Daily Rate (ADR), or by dividing total room revenue by the number of available rooms. RevPAR is the most widely used metric for measuring hotel revenue performance because it accounts for both occupancy and rate.
What is a good occupancy rate for a hotel?
A "good" occupancy rate depends on the hotel type, location and season. For most independent hotels, an annual average occupancy of 60–75% is generally considered healthy, though this varies by market and property type. Occupancy alone is not the best measure of performance — RevPAR (which combines occupancy and rate) is a more useful indicator.
Frontdeskey Reporting
Frontdeskey's PMS generates daily ADR, occupancy and RevPAR reports automatically — giving independent hotel owners the data they need to make informed pricing decisions.