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# Average room rate, occupancy, and revenue per available room

The average achieved room rate is one of the key figures in the hotel industry. Together with the average room occupancy, can be combined into the so-called RevPar the “Revenue per Available Room”.

You calculate the average room rates as follows:

Method of calculation: NET lodging sales divided by the number of hired out rooms.  For example, 80 rooms that were rented out for € 6,800 net lodging turnover per day, amount to a daily average room rate of € 85.00.

The average occupancy / utilization (English “Occupancy Rate” = OR), describes the proportion of rented out rooms. You calculate this key figure as follows:
Method of calculation: OR = total occupied rooms divided by the total rooms available
For example, a hotel has 100 rooms, of which 80 rooms were occupied
Calculation: 80 by 100 = 80%
Result: The hotel has therefore an occupancy rate of 80% on this day.

A key figure of “ARR” has little meaning without the other key figure of the occupancy rate. The average room price of € 200 should be barely economical with 10% of occupancy. Vice versa, 90 % occupancy at an average price of €10.00 for a 3 or 4 star hotel is not sufficient.

A useful combination results from the two key figures, thus, to compare various hotels it only needs this key number, the RevPar that is the revenue per available room:

You calculate the RevPar as follows:
Method of calculation: RevPAR = NET lodgings sales divided by the total number of rooms available.

Example: You make a lodging sale in one day of a NET amount of € 8,500 for 100 available rooms, of which 80 are occupied.
Calculation: 6,800 divided by 100 = € 68.00
Result: The lodgings revenue per available room (RevPar) on this day amounts to € 68.00

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