While RevPAR is one of the most recognised and used performance measures in the hospitality industry, providing general market trends and some revenue indications, there are some pitfalls to be aware of when analysing a hotel's performance based solely on RevPAR.

This article shows the major pitfalls of RevPAR, and elaborates on the advantages of using a complementary performance measure, GOPPAR (Goh-Par).

RevPAR

RevPAR, or rooms revenue per available room, is calculated by dividing a hotel's net rooms revenue (after discount and sales taxes and net of breakfast or other meals) by the total number of available rooms or by multiplying a hotel's average daily room rate (ADR) by its occupancy.

Pitfalls of RevPAR

Revenue Mix: In some instances, rooms revenue accounts for no more than 50-55% of total revenue. These include hotels with substantial food and beverage (and meeting and conference) operations. In such cases, RevPAR would only reflect a portion of a hotel's revenue performance, disregarding all other sources of incremental revenues. This will result in an inaccurate analysis when comparing hotel performances. For example, Hotel X has an average rate of lb70, 70% occupancy, and 100 rooms. Other departmental revenues (including food and beverage and other operated departmental revenues) for Hotel X ...