Adjusted Revenue Per Available Room or ARPAR is a hotel performance metric used when you want to take variable costs and additional revenue into account.
Use the calculator to find your ARPAR and calculate the performance of your revenue management.
Table of Contents
ARPAR or Adjusted Revenue Per Available Room is similar to RevPAR, but also takes into account variable costs and additional revenue per available room. Costs are subtracted and revenue is added to the total room revenue in order to provide a measurement of profit generated per available room.
The ARPAR formula is:
|ARPAR =||Total Revenue|
|Available Rooms · Days|
|Total Revenue =||Room Revenue + Additional Revenue - Variable Costs|
Room Revenue is the revenue you earned by renting out rooms only. It does not take into account other revenue you might be generating from your vacation rental.
The variable costs are costs that incur when the room is in use like cleaning, utilities, toiletries, TV, internet etc.
Additional revenue can come from sources like golfing, spa, restaurant, conferences, etc.
Available Rooms is the number of rooms you have available for sale. Rooms not available for some reason, like rooms occupied by staff or down for maintenance are excluded.
Days is the number of days in the period you are measuring for.
What is the use of ARPAR?
ARPAR is used to provide an insight into how much profit a room generates on average and assess the overall effectiveness of the hotel's pricing strategy.
Example of ARPAR calculations
To calculate your ARPAR, you will first need to calculate your additional revenue and variable expenses. Additional revenue can come from your restaurant, bar, spa, conference activities etc. Variable expenses consist of things like cleaning, toiletries, utilities and other expenses that occur when the rooms are rented.
If you have 50 room and find that your Room Revenue was $1200000, your additional revenue was $250000 and your variable expenses were $800000 during the last year, your ARPAR is:
|ARPAR =||$1200000 + 250000 - 800000|
|50 · 365|
which equals $35.62.