RevPAR versus RevPOR
RevPAR vs RevPOR contrasts two vital hotel industry metrics: Revenue Per Available Room and Revenue Per Occupied Room. RevPAR measures average revenue per available room, indicating occupancy efficiency. RevPOR assesses revenue from occupied rooms, reflecting guest spending power. Understanding both helps hotels balance room occupancy with profit maximization.
Key Takeaways
- RevPAR Calculation: RevPAR is calculated as room revenue divided by available rooms or ADR x occupancy rate.
- RevPOR Focus: RevPOR measures the total revenue generated by occupied rooms, including additional services beyond room rates.
- Different Indicators: While RevPAR indicates efficiency in room usage, RevPOR shows revenue potential from occupied rooms, including all services.
- RevPOR Inclusion: Unlike RevPAR, RevPOR includes additional revenue from services like food and laundry in its calculation.
- Indicative Differences: RevPAR indicates room usage efficiency, while RevPOR shows the revenue potential of occupied rooms, including all services.
Introduction
Revenue per available room, or RevPAR, and revenue per occupied room, or RevPOR, are two KPIs used within the hotel industry, especially for revenue management purposes. Although the two metrics have similar names, what they measure is quite different, meaning neither KPI is necessarily more useful than the other.
How Do You Calculate RevPAR and RevPOR?
The formulas for working out the revenue management metrics RevPAR and RevPOR are as follows:
RevPAR = Rooms Revenue / Rooms Available OR RevPAR = Average Daily Rate x Occupancy Rate
RevPOR = Total Revenue Generated By Occupied Rooms / Number of Occupied Rooms
RevPAR vs. RevPOR
As a KPI, RevPAR is concerned with the amount of revenue the hotel generates in relation to the number of available rooms. Therefore, it is useful to those operating in hotel management, because it indicates how well their business uses the rooms at their disposal. That being said, a limitation is that it is only concerned with revenue from room rates, which does not indicate overall business performance.
By contrast, RevPOR is concerned with the total revenue generated by occupied rooms. Unlike RevPAR, it factors in additional revenue earned through other services, such as food and laundry. It is useful as a KPI because it reveals how much revenue, on average, the hotel is taking from each room they sell. However, a limitation is that it does not factor in the percentage of sold rooms.
Therefore, the question of RevPAR vs RevPOR is less about which is better for revenue management, and more about how to use both to indicate different things.
For more detailed information about RevPAR and RevPOR, please read the articles “What is RevPAR?” and “What is RevPOR”.
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