What do you really earn from your apartment? Occupancy, ADR and RevPAR without a doctorate in spreadsheets

Ask an apartment owner a simple question, "how much do you earn from one flat a month?", and nine times out of ten you will hear the amount that landed in the account from Booking.com. The trouble is that this is not earnings. It is gross revenue, with commission, cleaning, utilities, laundry, cleaning products and your time not yet deducted. Without a few simple measures you are running an apartment blind, and you never know whether an empty Tuesday in November is a problem or the norm.

The good news: you do not need a doctorate-level spreadsheet or expensive software. Four numbers, worked out on your phone in a few minutes, are enough. Here is what they mean and how to read them, so you finally know where the money is really going.

Occupancy: how many nights you actually sell

Occupancy is the simplest measure: the percentage of nights you managed to let. You calculate it by dividing the nights sold by the nights available in the period and multiplying by a hundred.

An example: in a 30-day month the apartment was occupied for 18 nights. 18 divided by 30 is 0.6, that is 60% occupancy. It sounds decent, but the number alone tells you nothing until you set it against the season and the price. Occupancy of 60% in July at the coast is a disaster. The same 60% in November in a regional city is a very good result.

Watch out for the trap: occupancy is easy to inflate by cutting the price to the bone. A flat occupied for 28 nights at PLN 120 gives you less than 18 nights at PLN 250. That is why occupancy is never looked at in isolation from the rate, and that is where the next two measures come in.

ADR: the average price per night sold

ADR (Average Daily Rate) is your revenue from stays divided by the number of nights sold. You count only nights actually let; empty days do not count.

An example: in a month you earned PLN 4,500 from 18 nights sold. PLN 4,500 divided by 18 is an ADR of PLN 250. That is the real average price a guest pays you, after all the last-minute discounts, long-stay reductions and weekend premiums. ADR shows nicely whether your price raising and cutting makes sense: if you sit on one fixed rate all year, ADR will be flat as a board, and you are leaving money on the table at holidays and public holidays.

RevPAR: the measure that tells the whole truth

Here it gets interesting. RevPAR (Revenue Per Available Room) combines occupancy and ADR into one number, which makes it the fairest measure of how your apartment is performing. You can calculate it two ways, both giving the same result:

• revenue from stays divided by all available nights (not only the ones sold), or
• ADR multiplied by occupancy.

With PLN 4,500 of revenue and 30 available nights, RevPAR is PLN 150. Or put another way: PLN 250 ADR times 0.6 occupancy is PLN 150 RevPAR. That number tells you how much each night you offer earns on average, whether or not it was sold.

Why does it matter so much? Because RevPAR captures the trade-off the other two measures cannot see. You can have high occupancy and low RevPAR (selling a lot, too cheaply). You can have high ADR and low RevPAR (expensive, but nearly empty). Only when RevPAR rises do you know for certain that your pricing decisions genuinely increase earnings rather than merely shifting them from one column to another.

Guest acquisition cost: what Booking is eating

The fourth number, and one few people think about. For every booking from a portal you pay commission, most often 15% to 18% on Booking.com. Add card fees, any advertising and your own time on handling. It is worth working out what a booking from each channel really costs you.

A PLN 1,000 booking from Booking.com at 17% commission leaves PLN 830 in your pocket. The same booking from your own reservation page, where you pay no commission on turnover, leaves you the full PLN 1,000 minus a few zloty for payment handling. Across 40 bookings a year that is a difference of several thousand zloty that stays with you instead of landing in an intermediary's account. So it is worth watching what percentage of guests come back to you directly. The higher it is, the lower your real acquisition cost.

How to turn this into a habit

You do not have to calculate it daily. Once a month, when doing the accounts, put four things into a simple table: nights sold, revenue from stays, commission and the number of direct bookings. The rest works itself out. After three or four months you will see a trend, and a trend is worth more than a single number.

Look for specific signals. RevPAR falling despite high occupancy? You are selling too cheaply, so raise the rates for the coming weekends. Occupancy dropping while ADR holds? The price is too high for those dates, so switch on a last-minute discount or shorten the minimum stay. The share of portal bookings rising? Time to push your own page and returning guests harder, to win back the margin you are handing over in commission.

An owner who knows their RevPAR makes decisions. An owner who looks only at money coming in from Booking.com reacts to what has already happened, usually a month too late.

This is not knowledge reserved for corporate hotel chains. The same four measures work identically on one flat in a block and on two hundred rooms. The difference is that with one apartment you can work them out over morning coffee, and for the first time you will genuinely know what you earn.