Occupancy shows how many nights (in a hotel, room nights) were sold; it says nothing about revenue. ADR is the average nightly price, and RevPAR is the revenue per available night. For a sound decision you need to look at all three together.
Three basic numbers
- Occupancy rate: nights sold ÷ nights available.
- ADR (average daily rate): accommodation revenue ÷ nights sold.
- RevPAR (revenue per available night): accommodation revenue ÷ nights available. It also equals occupancy × ADR.
For a villa, nights available is the number of days in the month. For a hotel, available room nights are used: number of rooms × number of days.
Example 1: A villa that is less full but earns more
The numbers below are an example, not data from a real villa or hotel. Consider two pricing strategies for a villa in a 30-night month:
| Strategy A | Strategy B | |
|---|---|---|
| Nights sold | 18 | 12 |
| Nightly price (ADR) | €500 | €800 |
| Occupancy | 60% | 40% |
| Total revenue | €9,000 | €9,600 |
| RevPAR | €300 | €320 |
In Strategy B the villa is less full but earns more. Because fewer nights are used, cleaning, wear and operating costs are also usually lower. An owner who looks only at occupancy would think A is more successful.
Example 2: A small 10-room hotel
This is also an example, not real data. In a 30-day month, a 10-room hotel has 300 available room nights (10 × 30).
| Strategy A | Strategy B | |
|---|---|---|
| Room nights sold | 180 | 150 |
| Average room rate (ADR) | €100 | €130 |
| Occupancy | 60% | 50% |
| Total room revenue | €18,000 | €19,500 |
| RevPAR | €60 | €65 |
Here too, lower occupancy brings higher revenue. A hotel has an extra difference: every room night sold creates cleaning, laundry and staff work. Reaching the same revenue with fewer room nights can therefore improve profitability as well.
The opposite can happen too
Keeping the price high does not always pay. If the price stays too high, nights remain empty and RevPAR falls. The goal is neither the highest occupancy nor the highest price, but the balance that gives the highest RevPAR. Because this balance changes with season and demand, you need dynamic pricing.
Things to watch when calculating
- Track net revenue after commissions separately. Commission rates differ between channels.
- Decide from the start whether items such as the cleaning fee and breakfast are included in revenue, and use the same method in every period.
- Do not count nights used by the owner or closed for maintenance in the “nights available” figure.
- In a hotel, also look by room type: which room type fills first and which fills late? (pricing by room type in a small hotel)
- Look at the whole season and at last year, not at a single month.
How to track these numbers
It is enough to export your reservation data from your channel manager into a monthly table. For the villas and hotels that work with us, these numbers are reported regularly; you can see the scope on our services page.