What is the primary component of determining REVPar?

The primary component of determining Revenue Per Available Room (REVPar) is the average daily rate (ADR). REVPar is calculated by multiplying the ADR by the occupancy rate or by dividing total room revenue by the number of available rooms. Therefore, the average daily rate directly influences REVPar, as it reflects how much revenue is being generated for each room sold.

While factors like the number of rooms sold and occupancy rates play essential roles in the overall performance of a hotel, they are used in conjunction with ADR to arrive at the REVPar figure. For instance, a high occupancy rate with a low ADR might still yield a lower REVPar compared to a situation with a moderate occupancy rate at a high ADR. Market demand is also a crucial factor in determining pricing strategies, but it does not directly constitute part of the REVPar calculation itself. Thus, understanding ADR as a foundational element provides insight into optimizing revenue strategies within the hospitality industry.