Referred to in commercial real estate as RevPar, Revenue Per Available Room is a metric used in hotel underwriting to calculate the amount of revenue each available room generates in a given period.

RevPar is calculated by either 1) dividing the total actual revenue generated by the number of available rooms or by 2) multiplying the hotel’s average daily room rate (ADR) by the hotel’s occupancy rate. The RevPAR differs from the ADR in that it accounts for any unoccupied rooms.

RevPar = Total Actual Revenue ÷ Available Rooms

Or

RevPar = ADR x Occupancy Rate

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