What is the ARPAR in the hotel industry?
ARPAR (Adjusted Revenue per Available Room) is a metric used in the hotel industry that takes a variety of factors into account that influence hotel revenue. ARPAR can provide hoteliers with a more accurate view of profitability than RevPAR (Revenue per Available Room)
Like other revenue-based performance metrics, what qualifies as a good ARPAR will vary greatly depending on factors such as hotel class, property location and seasonality.
How do you calculate adjusted revenue per available room?
To calculate Adjusted RevPAR, you must first determine the property’s ADR (Average Daily Rate) metric by dividing the total revenue from room sales by the total number of rooms sold. With this metric in hand, you can complete the ARPAR formula by subtracting variable costs, adding additional revenue and multiplying by occupancy.
The ARPAR formula is: Adjusted RevPAR = (ADR - Variable Costs per Occupied Room + Additional Revenue per Occupied Room) * (Number of Rooms Occupied in a Given Period)
How can hoteliers increase adjusted RevPar?
There are essentially two ways to increase ARPAR:
- Find ways to cut costs on the services and amenities you already offer at your property; however, it is important that you not decrease the value provided in your efforts to do so
- Find ways to provide additional value to guests that drive revenue without incurring significant new costs
The deployment of hotel technology tools that increase operational efficiency and provide low lift opportunities to drive more revenue — such as Contactless Check-In, Dynamic Upsells and Guest Messaging — are a common way that modern hoteliers increase adjusted RevPAR.