RevPAR is not enough: reading performance with TRevPAR and GOPPAR
Why can profit fall while RevPAR rises? What occupancy, ADR, RevPAR, TRevPAR and GOPPAR measure, and which one to use for which decision, with a worked example.
Hotel performance conversations usually start with three metrics: occupancy, ADR and RevPAR. All three matter, but all three measure room revenue only. None of them answers the profit question.
Definitions first
| Metric | Formula | What it tells you |
|---|---|---|
| Occupancy | Rooms sold ÷ rooms available | How much capacity was used |
| ADR | Rooms revenue ÷ rooms sold | Average price of a sold room |
| RevPAR | Rooms revenue ÷ rooms available | Occupancy × ADR; rooms revenue per room |
| TRevPAR | Total operating revenue ÷ rooms available | Revenue from all departments per room |
| GOPPAR | GOP ÷ rooms available | Gross operating profit per room |
The shared denominator is rooms available, which makes properties of different sizes and different periods comparable.
An example: RevPAR rises, profit falls
Take a 200-room hotel over a 30-day month. Available room nights: 200 × 30 = 6,000. Compare two pricing strategies. The figures are sample values chosen only to illustrate the calculation.
Strategy A: 4,800 rooms sold at an ADR of €125.
- Occupancy 80%, rooms revenue €600,000, RevPAR €100
Strategy B: Rates are cut; 5,400 rooms sold at an ADR of €112.
- Occupancy 90%, rooms revenue €604,800, RevPAR €100.80
Looking at RevPAR alone, B wins. Now add the variable cost of each occupied room: housekeeping labour, laundry, amenities and channel commission. In this example that is €28 per occupied room.
| A | B | |
|---|---|---|
| Rooms revenue | €600,000 | €604,800 |
| Variable room cost | €134,400 | €151,200 |
| Rooms contribution | €465,600 | €453,600 |
Strategy B produces a higher RevPAR but leaves €12,000 less contribution. The cost of the extra 600 rooms is larger than the revenue they add after the rate cut.
How TRevPAR changes the story
The extra 600 room nights in strategy B may also spend in the restaurant, bar and spa. That spend may or may not offset the loss in the rooms department. TRevPAR, total revenue per available room, is how you see it. In an all-inclusive concept the picture can reverse again, because extra guests add food and beverage cost as well.
So the right question is not “which strategy brings more room revenue?” but “which strategy leaves the hotel more profit?”
GOPPAR: the common language of profit
GOPPAR divides gross operating profit under the USALI structure by rooms available. Because it includes departmental profits and undistributed expenses, it lets you:
- compare properties with different concepts (city, resort, all-inclusive) on the same scale,
- see the combined effect of rate, channel and cost decisions in one number,
- put the owner–operator performance conversation on common ground.
Which metric for which decision?
| Decision | Look first at |
|---|---|
| Daily rate and channel decisions | ADR, occupancy, RevPAR |
| Campaigns and packages | TRevPAR and departmental contribution |
| Annual budget and targets | GOPPAR and GOP margin |
| Portfolio comparison | GOPPAR |
Conclusion
RevPAR is a starting point, not the destination. A plan that does not weigh rate decisions against room costs and other departments’ revenue can grow occupancy while eroding profitability.
In DRM Budget, the revenue plan is built by room nights, rate, segment and channel; the same plan connects through configured drivers to the cost budget and the USALI departmental P&L. The effect of a pricing scenario is read in GOP, not just in RevPAR.