RevPAR is one of the most widely used hotel metrics — and for good reason.
It’s simple. It’s comparable. It shows how well a hotel captured demand relative to the market. But RevPAR can also be misleading if it’s read in isolation.
1. RevPAR can rise while profit stalls
A hotel can grow RevPAR by:
Discounting to drive occupancy, relying more heavily on OTAs, and stretching labor to cover higher volume.
On paper, performance looks strong. In reality, flow-through collapses.
When incremental costs grow faster than incremental revenue, RevPAR stops being a signal of success.
2. RevPAR ignores how revenue was generated
Two hotels post the same RevPAR.
• Hotel A achieved it through direct bookings and disciplined labor
• Hotel B achieved it through discounted OTAs and overtime
Same RevPAR. Very different GOP. RevPAR tells you what happened, not how it happened.
3. RevPAR doesn’t capture operational stress
High RevPAR nights often come with:
Overtime, service delays, guest compensation and staff burnout.
None of this shows up in RevPAR reports.
But it shows up later — in:
Turnover, guest satisfaction and maintenance deferrals.
RevPAR can look strong while the operation is quietly absorbing damage.
4.RevPAR can improve by hurting future performance
Short-term discounting can boost RevPAR today, but:
Reset corporate expectations lower, weaken group negotiations, and slow rate recovery.
The metric improves, but pricing power erodes.
Owners and asset managers usually feel this pain months later.
5. Why owners don’t stop at RevPAR
Owners use RevPAR as a starting point, not a conclusion.
They quickly move to:
RevPAR → GOP → NOI
Because:
RevPAR doesn’t pay debt
RevPAR doesn’t fund CapEx
RevPAR doesn’t protect asset value
Cash flow does.
RevPAR is an excellent benchmarking metric.
But performance quality shows up in:
Flow-through, cost discipline, and operational sustainability.
RevPAR measures performance. Flow-through reveals whether it actually worked.
#hotelfinance #hotelmanagement #hotelops #hotelInvestment #RevenueManagement #ADR #RevPar