Three numbers that tell you how your rooms are performing
Three figures answer most questions an owner has about room business. Occupancy percentage tells you how full the hotel was. ADR (average daily rate) tells you the average price you actually achieved for each room sold. RevPAR (revenue per available room) combines the two into one figure that shows how much each room in the building earned, whether it was sold or not.
This guide is for owners and managers of small and mid-sized hotels, lodges and guest houses who receive daily or monthly reports but are not sure which numbers to act on. After reading it you should be able to calculate all three figures for your own property, read where your bookings come from, and run a short weekly review that leads to decisions rather than just a printout.
Occupancy percentage: rooms sold against rooms available
The formula is simple: occupancy % = rooms sold ÷ rooms available × 100. Rooms available for a period is the number of rooms multiplied by the number of nights. A 20-room lodge has 20 room-nights to sell each night and 600 in a 30-day month.
The judgement lies in what you count. Decide these rules once, write them down, and apply them every month, because consistency matters more than which rule you choose:
- Rooms under maintenance: either remove them from rooms available for the days they were blocked, or keep them in and accept a lower occupancy. Many owners remove them but track the blocked nights separately so a long repair is not hidden.
- Complimentary rooms: rooms given free to a guest or a business contact are occupied but earn nothing. Count them as sold for occupancy but with zero revenue, or report them separately.
- Staff or house use: rooms used by staff or the owner's family are best kept out of rooms sold, otherwise occupancy looks healthier than the business is.
- Day use: rooms let for a few hours without an overnight stay need a clear rule, because counting them as full room-nights can inflate occupancy.
ADR: the average rate you actually achieved
The formula is ADR = room revenue ÷ rooms sold. Room revenue means what guests paid for the rooms themselves, after discounts, and before GST. Food, laundry, transport and other services are left out, because they would make ADR rise and fall for reasons that have nothing to do with room pricing.
ADR is almost always lower than your published rack rate, and the gap is informative. Corporate rates, long-stay discounts, festival offers and staff who lower the price to close a walk-in all pull it down. If your rack rate for a deluxe room is well above what the reports show as its ADR, look at who is approving discounts and why.
RevPAR: one figure that combines occupancy and rate
There are two ways to calculate it, and both give the same answer: RevPAR = room revenue ÷ rooms available, or RevPAR = occupancy (as a decimal) × ADR.
RevPAR is useful because occupancy and ADR can move in opposite directions. Cutting rates usually raises occupancy and lowers ADR; holding rates firm does the reverse. RevPAR tells you which combination actually brought in more room revenue for the property as a whole. It is also the fairest way to compare two months, two room types or two properties of different sizes.
A worked example for a 20-room lodge
All figures in this section are illustrative examples with round numbers, not data from any real hotel.
Take a 20-room lodge over a 30-day month with no rooms blocked for maintenance. It has 600 room-nights available. During the month it sold 390 room-nights and earned ₹9,75,000 in room revenue, excluding GST and food.
| Measure | Calculation | Result |
|---|---|---|
| Rooms available | 20 rooms × 30 nights | 600 room-nights |
| Occupancy | 390 ÷ 600 × 100 | 65% |
| ADR | ₹9,75,000 ÷ 390 | ₹2,500 |
| RevPAR | ₹9,75,000 ÷ 600, or 0.65 × ₹2,500 | ₹1,625 |
Comparing two pricing choices for a busy Saturday
Now suppose the owner has to decide how to price a Saturday when a local event is in town. Option A drops the rate to fill the hotel. Option B holds the rate and accepts fewer rooms sold.
| Option A: lower rate | Option B: hold rate | |
|---|---|---|
| Rate per room | ₹2,000 | ₹2,800 |
| Rooms sold out of 20 | 18 | 13 |
| Occupancy | 90% | 65% |
| Room revenue | ₹36,000 | ₹36,400 |
| RevPAR | ₹1,800 | ₹1,820 |
Option A looks better on occupancy, but RevPAR is almost the same, and Option B has five fewer rooms to clean, five fewer sets of linen to wash and fewer toiletries used. Work out your own cost for each occupied room, including laundry, amenities, electricity and housekeeping time, and the choice often becomes clear. Option A can still be right if fuller rooms bring meaningful restaurant sales, which is why the owner should look at the whole picture rather than one number.
Where your bookings come from, and what each source is worth
Total occupancy hides an important question: which channels are bringing guests, and at what rate? Small hotels typically receive bookings as walk-ins, direct phone or website bookings, bookings through online travel platforms, and corporate or travel agent bookings. Each behaves differently.
| Source | Rooms sold | Room revenue | ADR |
|---|---|---|---|
| Walk-in | 120 | ₹2,64,000 | ₹2,200 |
| Direct phone and website | 90 | ₹2,43,000 | ₹2,700 |
| Online travel platforms | 110 | ₹2,86,000 | ₹2,600 |
| Corporate accounts | 70 | ₹1,82,000 | ₹2,600 |
| Total | 390 | ₹9,75,000 | ₹2,500 |
In this example, online platforms show a healthy ADR, but that figure is before commission. Deduct the commission you actually pay under your own agreements to see what you keep. Direct bookings often earn the most per room because there is no intermediary, which is why many owners invest in a clear website with a phone number and a well-maintained Google Business Profile. Our guides to local SEO for small businesses and MATROP's website design service cover that side.
Walk-ins earning the lowest ADR is common for a lodge near a railway station or bus stand, where guests compare prices at the door. That is not a problem by itself, but if reception regularly drops the rate to close a walk-in, set a minimum walk-in rate and require approval below it.
A 20-minute weekly report routine for owners
Reports help only when someone acts on them. A short fixed routine each week works better than a long monthly meeting:
- Look at last week's occupancy by day of the week. A hotel used by business travellers may be full on weekdays and quiet on weekends; a resort is often the opposite. Price each day for its own demand.
- Check ADR by room type. If a premium room sells at nearly the same ADR as a standard room, guests are not seeing the difference or staff are discounting it.
- Compare RevPAR with the same week last month and last year, if you have the data.
- Review the booking-source split and note any channel that is growing or shrinking.
- Open the availability calendar for the next two to four weeks and see what is already booked. Low bookings ahead are the time to act, not the morning of arrival.
- Write down one decision for the week, such as a new minimum walk-in rate or a weekend package, and check its effect next week.
If your hotel has a restaurant, review it in the same sitting; our guide to weekly restaurant reports for owners suggests which restaurant numbers to read.
Getting trustworthy numbers from MATROP's hotel software
Every figure in this article depends on bookings, check-ins and checkouts being entered on time. If a guest is checked in only on the next morning, or a room stays occupied in the system after the guest leaves, occupancy and ADR will be wrong no matter how good the report looks. The front desk habits that prevent this are covered in our front desk tips for fewer errors.
In MATROP's hotel management software, occupancy reports show room status, bookings and an availability calendar. Revenue reports give daily, weekly and monthly income with a break-up by source, and the manager's dashboard shows occupancy percentage. Payment reports cover advances, pending amounts and checkout settlements. Bookings can be recorded as walk-in, phone or online, which is what makes a source break-up possible. The add-on mobile app gives the owner a dashboard and key reports on their phone.
ADR and RevPAR can be calculated directly from the occupancy and revenue figures using the formulas above. If you want them shown as named figures on your dashboard, ask about it in the demo. And if your property has only a handful of rooms, a daily line in a notebook with rooms sold and room revenue is enough to calculate all three numbers; software becomes worthwhile when bookings come from several sources and several people handle them.
Questions people ask
What is a good occupancy rate for a hotel in a smaller city?
There is no single figure that fits every property, because location, season and room rates all differ. Compare your occupancy with the same month last year and with your own targets, and ask your local hotel association whether it shares any area-wide figures.
Is high occupancy always a good sign?
Not on its own. A hotel can fill every room by cutting rates so far that RevPAR falls and the extra cleaning and laundry cost more than the additional revenue, so read occupancy alongside ADR and RevPAR.
Should GST and food sales be included when calculating ADR?
No. ADR and RevPAR are normally based on room revenue only, before taxes and without food, laundry or other services. Mixing them in makes your numbers impossible to compare from month to month.
Can we calculate these figures without hotel software?
Yes. You need rooms available, rooms sold and room revenue for each day, which a careful register and a spreadsheet can provide. Software mainly saves the counting and reduces errors once bookings are recorded properly.
