10 Key Hotel KPI Formulas to Track Performance and Profitability

Understanding Key Performance Indicators (KPIs) is the foundation of successful hotel revenue management. While some metrics are widely known and used for daily operations, others offer a deeper look into profitability, efficiency, and long-term strategy.

These 10 hotel KPI formulas provide both operational insight and profitability benchmarks. From foundational metrics like Occupancy, ADR and RevPAR, to deeper indicators like GOPPAR, Break-Even Occupancy, and ARG — understanding them allows hoteliers to make data-driven decisions.”

Below is a breakdown of the Top 10 Hotel KPI Formulas — starting with the essential, everyday metrics and moving to the more advanced ones that reveal a hotel’s true financial performance.

The Essential Hotel KPIs (Every Hotel Must Track)
These are the foundational metrics that every hotelier needs to track. They provide a quick, top-level view of a property’s performance.

      1- Occupancy Percentage

Hotel occupancy (OCC) is the number of occupied rooms at any given time compared to the total number of available rooms at a given time. It can be examined by day, week, month or yearly, hence Occupancy is a hotel KPI that determine a hotel’s performance that measures the number of rooms occupied in a hotel, and compares that to the total number of rooms available on the property

• Formula: (Rooms Sold ÷ Rooms Available) x 100
• Example: If you have 100 rooms and you sell 80 of them, your occupancy is 80%.
• Use: This is your primary measure of how well you’re utilizing your hotel’s capacity.

• Occupancy Percentage or Occupancy Rate = Rooms Sold ÷ Rooms Available) x 100

  2- Average Daily Rate (ADR)

This is the average price you’re getting for each room you sell.

• Formula: Total Room Revenue ÷ Rooms Sold
• Example: If your hotel makes $80,000 in revenue from 80 rooms, your ADR is $1,000.
• Use: It helps you measure how well you’re pricing your rooms.
• Tips: same goes to Average Room Rate (ARR)

• ADR = Total room revenue / Occupied rooms 

  3- Revenue per Available Room (RevPAR)

This is a crucial metric that shows the revenue generated for every room you have available, regardless of whether it was sold. It combines both your occupancy and pricing performance.

• • Formula: Total Room Revenue ÷ Rooms Available
  • Example: With $80,000 in revenue and 100 available rooms, your RevPAR is $800.
  • Use: It’s a key indicator of your hotel’s overall financial health.

The Lesser-Known (and More Powerful) KPIs
These metrics go beyond basic room revenue to provide a more comprehensive view of profitability and guest value. They are crucial for a sophisticated revenue management strategy.

     4- Cost Per Occupied Room (CPOR)

4. A key performance indicator that helps hotels measure and analyse if the operating cost for each room is reasonable or not and understand profitability.

• Formula: CPOR = Total Rooms Departments Cost ÷ number of total Sold / occupied Rooms.
• Example: Hotel total cost was $10,000 and you sold 50 occupied rooms, your CPOR would be $200
  $10,000 (cost) ÷ 50 total (sold / occupied rooms) = $200 (CPOR)
• Use: calculates the average cost to service each occupied room, helping to measure operational efficiency and profitability. It is determined by dividing the hotel’s total operational expenses by the total number of occupied rooms for a specific period.

• CPOR = Total Rooms Departments Cost ÷ number of total Sold / occupied Rooms.

  5- Average Rate per Guest (ARG)

Average Rate per Guest (ARG) is a hotel metric that measures the total revenue generated by each guest, not just the money they spend on their room. Unlike the Average Daily Rate (ADR), which only accounts for room sales, ARG includes everything a guest buys, such as food, drinks, spa services, and other add-ons..

• Formula: ARG = Total Room Revenue + Ancillary Revenue ÷ Total Guests
• Example: If a hotel with 100 guests charges $200 per room and each guest spends an extra $60 on valet parking, the total revenue is $26,000 ($20,000 from rooms and $6,000 from parking). When you divide this by the 100 guests, the Average Rate per Guest (ARG) is $260.
• Use: This is especially useful for hotels that frequently have multiple guests in a single room, as it gives a more accurate picture of per-guest revenue, hotels can also better understand a guest’s full spending habits and use that information to create more effective strategies for increasing revenue, such as offering personalized packages or promoting additional services. The formula is simply total revenue from all sources divided by the total number of guests.
• • ARG = Total Room Revenue + Ancillary Revenue ÷ Total Guests

  6- Double Occupancy Percentage

This shows you what percentage of your rooms are being occupied by more than one person, The formula determines the average number of guests per occupied room by dividing the total number of overnight stays by the total number of rooms that were occupied.

• Formula: (Number of Guests – Rooms Occupied) ÷ Rooms Occupied x 100
• Example: A hotel had 300 overnight stays and 150 rooms were occupied with more than one guest; the double occupancy percentage would be: (300 / 150) x 100 = 200%
• Use: This helps you forecast demand for things like amenities, food and beverage, and utilities.

  DBL Occ. % = Number of Guests – Rooms Occupied) ÷ Rooms Occupied x 100

  7- Average Length of Stay (ALOS)

This tells you how many nights, on average, your guests are staying, Average Length of Stay (ALOS) is the average amount of days /nights guests stays at the hotel during a particular period (day, week, month or year).

• Formula: Total Room Nights ÷ Number of Bookings
• Example: If you have 150 room nights from 50 bookings, the ALOS is 3 nights.
• Use: This is valuable for understanding guest behavior and for forecasting future revenue.

• (ALOS)=Total Room Nights ÷ Number of Bookings

  8- Gross Operating Profit Per Available Room (GOPPAR)

This calculates the average number of guests in each room that’s been sold.

• • Formula: GOPPAR is calculated by dividing annual Gross Operating Profit (GOP) by the total number of rooms available per year.
    GOPPAR = gross operating profit / Total number of Available Room
  • Example: If a hotel has a gross operating profit of $175,000 and 1,000 available room nights, its GOPPAR would be $175 ($175,000 / 1,000). This means that for each available room, the hotel brings in $175 in profit, on average, including additional purchases, such as room service.
  • Use: Hoteliers can detect changes in profitability and, if necessary, implement cost-cutting measures or cross-selling services to minimize expenses and increase revenue .

9-TrevPOR (Total Revenue Per Occupied Room)

Total Revenue per occupied room (TRevPOR) is a performance metric that measures the amount of total revenue generated by a hotel for a given period for every room occupied to determine how much profit a hotel earns when a customer enters the hotel.

• • Formula: TRevPOR is calculated by dividing a hotel’s total revenue by the number of rooms actually sold / occupied to/by guests for a given time period. Total Revenue should account for all guest revenue from accommodations, breakfast, spa services, bar and mini bar sales, and any additional revenue.
    TRevPOR = Total Hotel Revenue ÷ (Total Hotel Occupied Rooms)
  • Example: Total Hotel Revenue is $100,000 and Total Hotel Occupied Rooms 250, your Total Revenue per Occupied Room would be $400
    $100,000 ÷ 250 = $400.
  • Use: Hoteliers can understand how much total profit makes from the revenue generated by rooms that were actually sold and occupied

10-Break-Even Occupancy Percentage

The hotel minimum occupancy rate needed to cover all of a hotel’s costs, including fixed and variable expenses. To calculate it, you divide the total fixed costs by the profit made on each room (the room rate minus its variable costs). This shows the percentage of rooms that must be filled to avoid losing money.

This is the minimum occupancy you need to cover all your fixed costs, meaning you’re making no profit and incurring no loss.

• Formula: (Fixed Costs ÷ Room Revenue at 100% Occupancy) x 100 , or ( (Fixed Costs ÷ (Average Daily Rate (ADR) − Variable Cost per Room)) ÷ Total Available Rooms × 100)

Example: Hotel Information:

• • Total Fixed Costs (monthly): $100,000 (This includes things like rent, salaries for core staff, insurance, etc.)
  • Average Daily Rate (ADR): $200 (The average price guests pay per night)
  • Variable Cost per Room: $50 (This includes costs that change with each occupied room, like housekeeping labor, cleaning supplies, and guest amenities)
  • Total Available Rooms (per month): 100 rooms x 30 days = 3,000 room nights
    
    Step 1: Calculate the Contribution Margin per Room This is the profit you make on each room after covering its specific costs.
  • Contribution Margin = ADR – Variable Cost per Room
  • Contribution Margin = $200 – $50 = $150Step 2: Calculate the Break-Even Room Nights This is the total number of rooms you need to sell to cover all your fixed costs.
  • Break-Even Room Nights = Total Fixed Costs / Contribution Margin per Room
  • Break-Even Room Nights = $100,000 / $150 = 667 room nights
    
    Step 3: Calculate the Break-Even Occupancy Percentage This is the percentage of your total available rooms that you need to sell to reach the break-even point.
  • Break-Even Occupancy % = (Break-Even Room Nights / Total Available Room Nights) x 100
  • Break-Even Occupancy % = (667 / 3,000) x 100 = 22.2%
  • Conclusion: This hotel needs to maintain at least a 22.2% occupancy rate to cover all its costs. If it sells fewer rooms than that, it will lose money. Every room sold above that 22.2% mark contributes directly to the hotel’s profit.
  • Use: It helps hotel managers set essential sales targets to ensure the hotel stays financially viable, through, pricing and budgeting, strategic planning and performance analysis.

Professional Tip:

Knowing these formulas is just the first step. The real skill is in interpreting the results to make strategic decisions, such as adjusting room rates, launching promotions, or controlling costs to improve your hotel’s performance.

Don’t let misleading metrics fool you.

While RevPAR and TRevPAR are common ways to measure a hotel’s performance, they can be deceptive. These numbers are only as accurate as the Average Daily Rate (ADR) they’re based on.

The problem? Not all hotels calculate ADR the same way. A major chain might have consistent standards for its rooms and food and beverage (F&B) services. An independent hotel, however, might treat its F&B as a “cost center,” which can artificially inflate its ADR and make its RevPAR look stronger than it really is.

This means you can’t just compare your numbers to another hotel’s. You have to ask crucial questions about your competitors, or “comp set”:

• Are they similar in size and scale?
• Do they have transparent accounting practices?
• Do they target the same customer base?

If the answer to any of these is “no,” then comparing these metrics is pointless. They don’t give you the full picture of true performance.

Ultimately, Net Operating Profit (NOP) is what matters most. All the other metrics are just Key Performance Indicators (KPIs). A high RevPAR looks great on a report, but only NOP is what actually grows your business.

Frequently Asked Questions (Hotel KPI Formulas)

Q1. What is the most important KPI for hotels?
Occupancy, ADR, and RevPAR are the most common, but profitability-focused KPIs like GOPPAR and Break-Even Occupancy often provide deeper insight into long-term sustainability.

Q2. What’s the difference between RevPAR and GOPPAR?
RevPAR measures revenue per available room, while GOPPAR calculates profit per available room. RevPAR shows sales performance, but GOPPAR reveals true profitability.

Q3. How do you calculate Break-Even Occupancy for a hotel?
Divide your fixed costs by the contribution margin per room, then compare it to total available rooms. This shows the minimum occupancy needed to avoid losses.

Q4. How often should hoteliers update KPI calculations?
Daily monitoring is recommended for Occupancy, ADR, and RevPAR. Metrics like GOPPAR, TRevPOR, and Break-Even Occupancy are typically reviewed monthly or quarterly.

Q5. How can hotels improve their KPI performance?
Hotels can improve KPIs by optimizing pricing, reducing operational costs, increasing guest spend through upselling, and adopting a data-driven revenue strategy. A performance audit can highlight hidden opportunities.

👉 Tip: Our team at RevenueYourHotel.com offers independent Online Hotel Revenue Management Performance Audits to benchmark your KPIs, uncover inefficiencies, and boost profitability.