How To Calculate Average Room Revenue In Hotel

The average daily rate is calculated by taking the average revenue earned from rooms and dividing it by the number of rooms sold.

How to calculate average room revenue in hotel. Revenue per available room revpar is a performance measure used in the hospitality industry. Rooms revenue paid rooms occupied. Just remember to exclude any complimentary rooms or rooms occupied by staff members. Take that number and divide it by the total number of rooms sold this will be the same number you used for the incremental cost.

Hotel adr measures the average price paid per room. It excludes complimentary rooms and rooms occupied by staff. This hotel performance metric tells you the total room revenue for a certain period compared to the total amount of room revenue for all the paid and occupied hotel rooms within that same period. In america for a basic hotel usually the incremental cost is about 20 and the burdened cost is about 40.

This is necessary to measure the financial performance of the hotel. Adr average daily rate or arr average room rate is a measure of the average rate paid for the rooms sold calculated by dividing total room revenue by rooms sold. Adr is important because it s one of the primary metrics used to help you gauge the success of your hotel and how you measure against your competition. Some hotels calculate arr or adr by also including the complimentary rooms this is called as hotel average rate.

Revpar is calculated by multiplying a hotel s average daily room rate by its occupancy rate. For example if your hotel is occupied at 70 with an adr of 100 your revpar will be 70. The adr measures a hotel s financial. Definition formula and example to calculate average room rate or average daily rate.

Arr formula total room revenue total rooms occupied. Let s use 10 000 room nights. The other way to calculate it is by dividing the total number of rooms available in your hotel with the total revenue from the night. 400 000 10 000 room nights 40.

By taking the harr the management can find out the actual effect of complimentary stays on the average room rate. It s quite easy to calculate revpar. How to calculate arr. It is calculated by dividing total revenue by the number of available rooms.

However arr can also be used to measure the average rate for a longer period of time weekly monthly while adr may only be used to measure the average rate of one day. The adr formula is. Simply multiply your average daily rate adr by your occupancy rate.