Rooms Division Management Practice Test

RevPAR measures revenue per available room by linking how much you charge for rooms (ADR) with how full your hotel is (occupancy). The correct way to get RevPAR is to multiply the average daily rate by the occupancy rate, using the occupancy as a decimal (for example, 80% becomes 0.80). So if ADR is $150 and occupancy is 0.80, RevPAR is $120 per available room.

Dividing ADR by occupancy would distort the relationship, and using total revenue divided by the number of rooms gives revenue per room sold rather than per available room. Multiplying occupancy (as a percentage) by total revenue wouldn’t yield RevPAR, since RevPAR is based on room revenue per available room, not a share of total revenue.