How to calculate RevPAR (with a Philippine example)

The formula

There are two ways to get there and they give the same answer.

The direct way: take your room revenue for a period and divide it by the number of room-nights you had available in that period. Available, not sold — every room, every night, whether anyone slept in it or not.

The other way: multiply your occupancy rate by your average daily rate. If you already track those two, you already have RevPAR.

A worked example

Take a thirty-two room resort in July, a thirty-one day month.

Available room-nights: 32 rooms × 31 nights = 992.

Say 658 of those nights sold, for ₱2,535,904 in room revenue.

Why the third number is the one that matters

Occupancy tells you how full you were. ADR tells you what a sold night earned. Neither is safe on its own, because you can move either one by damaging the other.

Drop your rates and occupancy climbs — and you can end up busier and poorer. Push your rates and ADR climbs while rooms sit empty. RevPAR is the only one of the three that cannot be improved by robbing the other, which is why it is the number to watch when you are deciding whether a discount was worth running.

What RevPAR does not tell you

It is a revenue measure, not a profit one. A property can raise RevPAR by selling more nights that cost more to service, and end the month with less money.

It also ignores everything you earn that is not a room. If you have a restaurant, a bar or a dive shop, RevPAR is describing a fraction of your business — and TRevPAR, total revenue per available room, is the number that includes the rest.

The step beyond that is GOPPAR: gross operating profit per available room. That one has your costs in it, which is why it is the figure an owner should ask for.

Getting the two inputs when you do not have a system

Available room-nights is the easy one: count the rooms you could have sold, multiply by the nights in the period. If a room was genuinely out of service for the whole month — a refurbishment, not a bad night — leave it out and say so, because including it makes every month it happens look worse than it was.

Room revenue is where people go wrong. It means what the rooms earned, and nothing else. Not the restaurant, not the tours you booked for guests, not the transfer to the pier. Those belong in TRevPAR, and mixing them into RevPAR inflates a number you are supposed to be able to compare against other properties.

One more decision: recognise revenue when the stay happened, not when the deposit landed. A December booking paid in September is December revenue for this purpose, otherwise September looks like a record month you did not have.

A smaller worked example

The arithmetic does not change with size, and it is worth seeing it at a scale most Philippine properties actually operate at.

A ten-room guesthouse in September, a thirty-day month. Available room-nights: 300. Say 138 nights sold, for ₱372,600.

Occupancy is 46%. ADR is ₱2,700. RevPAR is ₱1,242 — and that last figure is the one to write down, because next September it is the only one of the three you can compare fairly against a month where you had eleven rooms instead of ten.

Three mistakes that make the number lie

Counting rooms you cannot sell. A room blocked for a month of repairs is not available inventory. Leaving it in the denominator quietly punishes you for maintaining the building.

Comparing to the wrong month. June and December are different businesses in this country. Year-on-year for the same month is the only comparison that means anything, and a rolling twelve-month figure is better than either for spotting a real trend.

Treating it as a profit measure. RevPAR can rise while your margin falls — more nights sold at a lower rate can cost more to service than they bring in. It is a revenue efficiency measure, and it needs your cost side beside it to become a decision.

What to compare it against

Industry benchmarks for the Philippines are thin at the small-property end, and the ones you will find usually describe city hotels of a size that has nothing to do with a twelve-room beachfront inn.

The most useful benchmark is your own property last year, in the same month, at the same room count. The second most useful is your own property this month against your budget. Chasing a national average is a good way to make a decision that suits somebody else's cost base.

If you have a restaurant, RevPAR is describing half your business

A resort with a kitchen earns from rooms and from food, and RevPAR only sees the first. Two properties with identical RevPAR can be in quite different health if one of them fills its restaurant every evening and the other does not.

TRevPAR fixes the numerator: total revenue — rooms, food, drink, tours, transfers — divided by the same available room-nights. It is the honest headline for a property that sells more than beds, and comparing it against RevPAR tells you how much of your business is not the rooms.

The figure worth putting beside both is GOPPAR: gross operating profit per available room. Revenue efficiency is only interesting if the cost of producing it is in the frame, and for an F&B operation the cost of sales moves enough that a good RevPAR month can be a poor GOPPAR one.

How often to look at it

Monthly is enough for most properties, and comparing the same month year on year is more useful than comparing this month to last — a June and a December in the Philippines are not the same business.

The only thing that makes it hard is the arithmetic being spread across a booking sheet and a bank statement. If your bookings and your rates already live in one system, the three numbers above are a screen rather than an evening.