>ARR and Revpar
To control whether strategies of Revenue is successful or not, is precise to control rooms revenue. There are two important indicators: ADR or ARR (average daily rate or average room rate) and Revpar (revenue per available room).
ADR or ARR: it is the average price of each room sold per day.
Revpar: it is the average price of each available room per day, per month or per year.
For instance, 100 capacity rooms hotel per day, but just sold 80 rooms and it produces 4.820 euros per month. So occupation percentage is 80%.
allotment 100 rooms
rooms sold 80 rooms
production 4.820 €
Average Room Rate 60 €
Revpar 48 €
ADR or ARR = Rooms Revenue per Month / rooms sold per month (in this case: 4820/80)
Revpar = Rooms Revenue per Month / available rooms (in this case: 4820/100)
Ideal Situation is Revpar = ADR, because it means 100% occupancy.
However, it is a general formula for all fields applicable to Revenue Theory, because in fact ARR or ADR is a Revenue Per Available Time-based inventory Unit (RevPATI): Airlines is Revenue per available seat-mile; rent a car is revenue per available car; restaurant is revenue per available seat; golf course is revenue per available tee-time, etc. Indeed REVPATI is average rate per capacity utilization.