Vacation Rental Metrics: RevPAR

Leslie James | January 3, 2019

RevPAR Formula

In hotel reporting, RevPAR is Revenue Per Available Room and is calculated by multiplying the Average Daily Rate (ADR) by the occupancy rate.

For Airbnb and HomeAway listings in MarketMinder, RevPAR is the Revenue Per Available Rental and is calculated by dividing the total revenue earned by the number of available listings.

Revenue per Available Rental (RevPAR)

There are two main competing schools of thought on how to boost vacation rental revenue:

  1. Lower the daily rate to encourage higher occupancy
  2. Maintain a higher ADR even if it means sacrificing on occupancy

Regardless of which strategy is chosen, there is general agreement on how to measure their combined impact: Revenue Per Available Rental (RevPAR). AirDNA provides two versions of RevPAR, and which one you use depends on what you’re trying to accomplish.

 

Two Versions of RevPAR

The definition of RevPAR in MarketMinder takes into account the entire available market.

By contrast, in all offline AirDNA reports geared towards industry professionals (tourism boards, vacation rental managers, hoteliers, academics etc.) the RevPAR definition only takes into account genuinely active listings (i.e. listings that had at least one booked day in the month).

A breakdown of how each definition is used is detailed below:

 

Revenue Per Available Rental (RevPAR)

Product

Calculation

MarketMinder Total Revenue / Number of Available Listings
Market Summary and Trend Reports ADR * Occupancy

 

Example: MarketMinder RevPAR

If the total monthly revenue (daily rates + cleaning fees) for all available listings is $200,000 and there are 100 active listings, then RevPAR would be $2,000.

 

Example: Market Summary and Trend Reports

If the calculated ADR is $120 and the calculated Occupancy is 80%, then RevPAR would be $96.

 

Hosts and real estate investors using MarketMinder are most interested in a broad view of revenue, and want to understand vacation rental revenue on a per-rental basis. This RevPAR calculation spreads total Revenue evenly across all available listings, enabling users to research and benchmark against the average revenue per listing.

Tourism boards and large-scale property managers have historically used hotel data to track lodging supply and demand in an area. Traditional hotel RevPAR is calculated by multiplying ADR by occupancy.

By providing this calculation, users get a version of RevPAR that more closely aligns with other data they are using. This allows them to review hotel and vacation rental RevPAR, for a more holistic view of lodging supply and demand in their market.

 

Increasing RevPAR

There are competing theories on whether ADR or occupancy drives RevPAR. Some research on the traditional lodging side has shown ADR to be the main driver.

On the other hand, some user feedback of Airbnb’s Smart Pricing tool, which automatically sets daily pricing for listings, seems to be that the tool errs on the lower side of ADR (often at or near the lowest-allowed price set by hosts), in order to boost the number of bookings.

 

AirDNA’s methodology and accuracy

At AirDNA, our mission is to be the most-trusted global provider of diversified private accommodation data.

With our combined years of industry experience, we have developed methods for calculating vacation rental ADR and RevPAR that best reflect their intended use and what’s actually happening in the marketplace.

Independent analysis has consistently shown the accuracy of AirDNA’s data to be unparalleled. Global real estate services and investment firm, CBRE, relies on our vacation rental data and has consistently found AirDNA’s margin of error to be less than two per cent. Through hundreds of data partnerships, we continue to refine and strengthen the data made available to our clients through our suite of online products and reporting tools.

Learn more about AirDNA's vacation rental metrics