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RevPAC (Revenue per Available Customer)

What is the definition of RevPAC in the hotel industry?

RevPAC (Revenue per Available Customer) is a metric that hotel owners and operators use to measure the average amount of revenue generated from each customer per night. 

Elements that can impact a hotel’s RevPAC include: 

  1. Location: The location of a hotel can have an effect on its RevPAC. Hotels located in areas with more tourist attractions, higher population densities, or strong business districts will typically have a higher RevPAC than those in rural or low-traffic areas.
  2.  Room Rates: Hotel room rates can also affect RevPAC. If a hotel is charging higher rates than its competitors in the area, it could lead to a higher RevPAC. On the other hand, offering lower rates can help to attract more customers, resulting in a higher RevPAC.
  3. Services and Amenities: The services and amenities offered by a hotel can also influence its RevPAC. Hotels that offer more services and amenities tend to be able to charge higher rates, resulting in a higher RevPAC.
  4. Marketing and Promotion: Hotels that are able to effectively market and promote their services can draw in more customers, which can translate into a higher RevPAC.
  5. Customer Satisfaction: Maintaining a high level of customer satisfaction is essential for any hotel to keep its RevPAC high. Customers who are satisfied with their hotel experience are more likely to return and recommend the hotel to others, resulting in a higher RevPAC

What is the RevPAC formula?

RevPAC is calculated by taking the total revenue generated at a property (room revenue and other revenue) divided by the total number of available guests.

The formula for RevPAC is: RevPAC = Total Revenue / Number of Available Customers

For example, if a hotel has total revenue of $50,000 and 500 available customers, then it has a RevPAC of $100. 

How do you increase RevPAC at a hotel?

There are a variety of steps hoteliers can take to improve RevPAC at their properties, including: 

  1. Offer personalized customer experiences: As customers increasingly expect to be treated as individuals, it is important for hotels to invest in technologies and services that allow them to personalize customer experiences. This could be in the form of a loyalty program that rewards customers for repeat visits, or by providing personalized service to guests based on their individual preferences.
  2. Leverage data to gain insights: Hotels should make use of customer data to gain insights into customers’ needs and preferences. This includes tracking customer interactions with the hotel, analyzing customer feedback, and using data analytics to gain further insights about customer behavior. By understanding customer needs, hotels can better tailor their services and offerings to maximize RevPAC.
  3. Improve customer service: Hotels should focus on providing high-quality customer service that is tailored to individual guests. This could include offering personalized recommendations, creating a welcoming atmosphere, and providing attentive and helpful staff.
  4. Engage with customers online: Hotels should take advantage of the digital space to engage with customers. This could include creating social media pages to connect with customers, responding to reviews and feedback, and creating content that resonates with guests and encourages them to book a room.

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