Sample interview questions: Can you explain the concept of revenue per available room (RevPAR) and how it is calculated?
Sample answer:
Revenue Per Available Room (RevPAR)
RevPAR is a key metric used in the hotel industry to assess revenue performance. It represents the average revenue generated per available room in a given period.
Calculation of RevPAR:
RevPAR is calculated using the following formula:
RevPAR = (Total Room Revenue) / (Total Available Rooms x Number of Days)
- Total Room Revenue: This includes revenue from all room rentals, excluding any incidental or ancillary charges.
- Total Available Rooms: This is the number of rooms available for sale during the specified period, regardless of whether they were occupied.
- Number of Days: This is the number of days in the period being analyzed.
Interpretation of RevPAR:
RevPAR provides insights into a hotel’s ability to maximize revenue from its room inventory. A high RevPAR indicates strong revenue performance, while a low RevPAR may suggest underutilized rooms or competitive pricing pressures.
Factors Impacting RevPAR:
- Occupancy Rate: The higher the occupancy rate, the more revenue is generated per available room.
- Average Daily Rate (ADR): The ADR is the average price charged for a room on a given day.
- Seasonality: Travel demand and room rates fluctuate throughout the … Read full answer