Kindergarten · Lesson 6 of 66
ADR, Occupancy and RevPAR
The three numbers that matter first, why two of them lie on their own, and the one that catches both mistakes at once.
5 min read +10 XP
Three numbers. Two of them are quoted constantly and lie on their own. The third one is the one to actually watch, and almost nobody at the barbecue mentions it.
ADR — what you got per night you sold
You booked 180 nights last year and collected $43,200 in nightly rate. $43,200 ÷ 180 = a $240 ADR.
Note what is not in there. Cleaning fees are not rate. Tax is not rate. Pet fees are not rate. If you fold those in, your ADR looks better and means nothing, and you will not be able to compare yourself to anybody.
Occupancy — the share of nights that sold
365 nights in the year. You blocked 18 for your own family, so 347 were available. You sold 219. That is 219 ÷ 347 = 63%.
Watch this one closely, because tools disagree. Some divide by available nights, some by all 365. On the numbers above that is 63% or 60% for the identical year. Know which your report is using before you compare yourself to anybody.
And occupancy lies in exactly the opposite direction from ADR. You can hit 95% occupancy tomorrow by pricing at $89 a night. A pricing tool left without a floor will happily do this for you.
Got it? Then here is the one that catches both.
RevPAR — the number that actually tells you something
$240 × 0.63 = $151 RevPAR. That is what every night you owned the house earned, whether somebody slept in it or not.
This is why it works: overprice and occupancy falls, so RevPAR falls. Underprice and ADR falls, so RevPAR falls. There is no way to game it by being wrong in one direction. It is the only headline number that catches both mistakes at once.
Your neighbour has a lower nightly rate, is quieter about it at parties, and is beating you by roughly $4,700 a year on an identical house.
What to do with this
- Track RevPAR monthly and compare it to the same month last year, not to last month. Seasonality will make month-over-month look like chaos.
- Use ADR and occupancy only as a diagnosis — when RevPAR drops, they tell you which way you went wrong.
- Never compare your ADR to a market average. Compare it to your own comp set, which is a much smaller and less flattering group.
Also defined: Gross Booking Revenue