RevPAR stands for revenue per available rental night. It is average daily rate multiplied by occupancy, or equivalently total revenue divided by every night the property was available rather than only the nights that booked. Because it accounts for empty nights, it is the single most useful number for comparing two short-term rentals.
Two equivalent formulas
RevPAR = ADR × occupancy, or RevPAR = total revenue ÷ nights available
Both give the same answer. The first is easier when you have market data; the second is easier from your own statements.
Why it settles arguments that ADR cannot
| Property | ADR | Occupancy | RevPAR | Annual revenue |
|---|---|---|---|---|
| A, premium pricing | $420 | 48% | $202 | $73,730 |
| B, volume pricing | $290 | 71% | $206 | $75,190 |
Property A looks far stronger on rate and is very slightly weaker on the number that pays the mortgage. RevPAR exposes that in one figure. It also has a second advantage: A turns over roughly 40% less often, so its operating cost is lower and its net position may well be better despite similar RevPAR. Revenue metrics rank properties; only a full expense build tells you which one to buy.
What RevPAR does not tell you
- Nothing about cost. Two identical RevPAR figures can produce very different cash flow depending on turnover frequency, cleaning cost, and management rate.
- Nothing about seasonality. An annual RevPAR hides whether the year is evenly earned or concentrated into four months, which determines your reserve requirement.
- Nothing about capital. RevPAR ignores purchase price entirely. A property with excellent RevPAR bought too expensively is still a bad investment.
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Frequently asked questions
How do you calculate RevPAR for a short-term rental?
Multiply average daily rate by occupancy, or divide total accommodation revenue by the number of nights the property was available for booking. Both methods produce the same figure. Exclude nights blocked for owner use from availability, or the result overstates performance.
Is RevPAR better than ADR?
For comparing properties, yes, because RevPAR accounts for empty nights while ADR ignores them. ADR remains useful for judging pricing power specifically, particularly when compared season by season against local comparables.
What is a good RevPAR?
It is market-dependent and only meaningful relative to comparable properties in the same submarket and period. A strong RevPAR in a low-rate market can be far below a weak RevPAR in a premium one.