How is RevPAR calculated?

RevPAR, which stands for Revenue Per Available Room, is an important metric in the hotel industry used to assess the financial performance of a hotel. The correct method to calculate RevPAR is by dividing total room revenue by the total number of rooms available for sale, regardless of whether those rooms were sold or not. This calculation captures the ability of a hotel to generate revenue from its available inventory and provides insight into occupancy trends and overall efficiency.

Using this formula, you can determine how well a hotel is performing in terms of its revenue-generating ability across both occupied and unoccupied rooms. This metric helps hotel managers and investors understand how effectively a property is maximizing its potential revenue.

Understanding the other choices helps provide clarity on why they do not accurately define RevPAR. For instance, the option suggesting that taxes should be subtracted or that expenses should be factored in does not align with the purpose and definition of RevPAR, which focuses solely on room revenue and available inventory. The importance of using only the rooms available as the denominator is to reflect the overall capacity rather than just the rooms sold, which gives a complete picture of revenue performance.