You know your ADR. You track occupancy daily. And you review RevPAR before your morning coffee. But knowing the formulas isn’t the same as using the metrics strategically. At scale, a hotel pricing strategy isn’t about watching one number move up or down.
NB: This is an article from TakeUp
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It’s about understanding how ADR, occupancy, RevPAR, segmentation, channel mix, and forecasting interact; and how to turn that complexity into smarter pricing decisions.
Let’s break it down the right way.
Why RevPAR, ADR, and Occupancy Must Be Analyzed Together
Let’s say your RevPAR went up 8% year over year.
Great news, until you dig in.
- Did ADR increase while occupancy fell?
- Did you fill low-rated group blocks that boosted occupancy but compressed ADR?
- Did OTA share grow, increasing RevPAR but lowering net profitability?
Looking at one metric in isolation hides the story. Here’s what sophisticated revenue teams ask instead:
- Is ADR growth sustainable at this occupancy level?
- Are we displacing higher-rated segments?
- Which room types are driving the lift?
- Is channel mix improving or eroding margins?
For a 40-room inn, these layers are manageable manually. For a 180-room lifestyle hotel with six room types, corporate contracts, weekend leisure spikes, and event-driven demand?
That’s a different game.
Layer 1: Segmentation; Not All Occupancy Is Equal
A 100+ room property typically balances:
Corporate negotiated rates
- Transient leisure (direct + OTA)
- Group blocks
- Promotions and packages
- Wholesale or opaque channels
Two nights can both show 75% occupancy and $180 ADR. But the revenue story might be completely different.
Example Scenario
Scenario One: Tuesday, Corporate Heavy
85% occupancy
60 rooms corporate at $195
15 transient at $210
10 direct BAR at $205
On paper, this is a strong weekday performance.
Most of the demand is negotiated corporate and direct transient. Acquisition costs are low. There is minimal commission exposure. No group concessions. No meeting space discounts. Limited operational strain.
Gross revenue and net revenue are closely aligned. This is high quality revenue.
