Hotel occupancy rate, ADR and RevPAR: formulas and examples

The hotel occupancy rate formula tells you how much inventory was sold. ADR and RevPAR add pricing and capacity context to that result. Use this worked example to build a consistent hotel revenue report before comparing periods or changing room rates.

Hotel occupancy rate, ADR and RevPAR explained

Occupancy describes how much inventory was sold, ADR describes the average rate achieved on sold rooms, and RevPAR relates revenue to available capacity. Definitions are available in the CoStar/STR glossary.

Read the measures together. A hotel can sell more rooms while discounting enough to reduce revenue per available room. Alternatively, a higher average rate can be offset by more unsold rooms. Calling one isolated number “good” does not provide enough context for a pricing decision.

A worked example for a 20-room hotel

These are illustrative figures, not Azerbaijan market benchmarks. Assume 20 rooms are available on each of 30 days. The hotel sells 420 room nights and earns AZN 33,600 in room revenue, excluding additional services.

Measure	Calculation	Result
Available room nights	20 rooms × 30 days	600
Occupancy	420 ÷ 600 × 100	70%
ADR	33,600 ÷ 420	AZN 80
RevPAR	33,600 ÷ 600	AZN 56

As a cross-check, multiply ADR by occupancy in decimal form: 80 × 0.70 = AZN 56. If the results differ, inspect the dates, revenue basis and room counts. Using 70 instead of 0.70 is a common spreadsheet input error.

Room revenue is different from cash received

A deposit taken in May for a June stay can appear in May’s cash receipts. For a room performance measure, use the accommodation revenue attributable to the period being analysed. Collecting an old balance is not a new room sale on the collection date.

Keep restaurant, transfer, laundry and other service revenue separate. Adding them to room revenue raises ADR without necessarily reflecting a higher room rate. If a package combines accommodation and other services, agree on an allocation approach with your accounting process and apply it consistently.

Document the treatment of taxes, discounts and refunds as well. Comparing tax-inclusive amounts in one month with tax-exclusive amounts in another can create a misleading trend. This guide does not prescribe an accounting standard; the aim is consistent management information.

Avoid common comparison mistakes

Do not take a simple average of daily ADR figures to calculate monthly ADR. A day with two rooms sold should not have the same weight as a day with twenty. Divide total monthly room revenue by total monthly sold room nights. Use period totals consistently for occupancy and RevPAR too.

Record how rooms removed from sale or under repair are treated. Different reporting conventions can produce different inventory bases. Compare figures prepared under the same method and disclose any change rather than presenting a methodological difference as sales growth.

Analyse hourly stays separately from overnight stays. Repeated use of one room during a day should not be added uncritically to a conventional room-night measure. A cancelled booking is not an occupied room night; track any cancellation charge separately.

Use the figures to frame a pricing decision

Consider two hypothetical outcomes. ADR of AZN 100 with 60% occupancy gives RevPAR of AZN 60. ADR of AZN 80 with 80% occupancy gives RevPAR of AZN 64. The second outcome generates more revenue per available room, but not necessarily more profit.

More guests may increase cleaning, supplies, breakfast and sales commission costs. Assess the extra costs and your team’s service capacity before choosing a pricing approach. Compare similar weekdays, weekends and demand periods rather than treating a holiday and an ordinary week as interchangeable.

Where to start with BirOtel reporting

Explore hotel cashier and reports and ask for a demonstration of room revenue, payments and balances over a chosen date range. Do not assume that every metric discussed here exists as a dedicated dashboard widget; confirm the reporting view you need in the demo.

What if no rooms were sold?

If sold room nights are zero, ADR is undefined because the denominator is zero. Marking the result as unavailable is clearer than suggesting that the achieved room rate was zero.

Are these calculations useful for a small hotel?

Yes. The logic works with a small inventory, provided the underlying reservation and account records are accurate. Stabilise data entry first, then use the resulting measures to support decisions.