What's the difference between RevPAR and ADR?

Both metrics measure room revenue performance but answer different questions. **ADR** answers: "When we sold a room, what was the average price?" Formula: Total Room Revenue / Rooms Sold. ADR isolates pricing decisions from demand. Two hotels with identical occupancy can have very different ADR depending on segment mix and rate discipline. **RevPAR** answers: "How much revenue did each available room generate?" Formula: Total Room Revenue / Rooms Available. Or equivalently: ADR × Occupancy Rate. RevPAR penalises empty rooms by including them in the denominator. **Worked example.** A 100-room hotel sells 70 rooms at €100 each in a single night. - ADR = €7,000 / 70 = €100 - Occupancy = 70 / 100 = 70% - RevPAR = €7,000 / 100 = €70 - Equivalently: RevPAR = €100 × 0.70 = €70 **When to use each.** ADR for pricing decisions ("can we charge more?"). RevPAR for total room performance ("are we capturing the demand available?"). Together they show whether you should optimise rate, occupancy, or both. **The trap.** Chasing ADR alone — raising rates aggressively — can drop occupancy enough that RevPAR falls. Chasing occupancy alone — discounting to fill rooms — drops ADR enough that RevPAR can also fall. The art is balancing both. **Industry standard:** RevPAR is the headline metric quoted in investor decks and STR benchmarks. ADR is the diagnostic metric used in revenue management decisions.