The method of determining revenue per available room involves dividing a hotel’s total revenue by the number of rooms available. For example, if a property generates $50,000 in revenue and has 100 rooms, the resulting figure would be $500. This metric provides a snapshot of a hotel’s ability to fill its rooms at an average rate, reflecting its overall financial performance.
This calculation offers crucial insights for hotel management and investors. A higher value often indicates stronger performance, driven by a combination of occupancy rates and average daily rates. Tracking this value over time allows for the identification of trends, the assessment of marketing strategies, and comparison against competitor performance within the market. Its historical context lies in the hospitality industry’s need for a standardized metric to evaluate and benchmark operational effectiveness.
