Seba BlancoI help independent hotels sell more effectively and operate smarter by combining hotel technology with sales and marketing.
Do not index
Do not index
Most independent hoteliers can quote their occupancy from memory and go blank on the rest. That's not a knowledge gap — it's a priority problem. Occupancy is the easiest number to feel and the worst one to manage by.
These ten metrics are the standard financial vocabulary of hotel management. Below, each one is explained by what it changes on Monday morning, not by its textbook definition.
The Three Revenue Metrics That Set Your Rate
Occupancy (%) is rooms sold divided by rooms available. Sell 14 of 20 rooms, you're at 70%. It answers one question — how full am I — and nothing about whether the fullness was worth it. A hotel at 95% occupancy after cutting rates 40% is busier and poorer.
ADR (Average Daily Rate) is room revenue divided by rooms sold. Note the denominator: only occupied rooms count. If those 14 rooms brought in $1,960, your ADR is $140. ADR tells you what your pricing and mix actually delivered, which is often lower than your rack rate once OTA discounts, group rates, and long-stay deals are blended in.
RevPAR (Revenue per Available Room) is room revenue divided by rooms available — occupancy × ADR. In the example above: $1,960 ÷ 20 = $98. This is the number that resolves the occupancy-versus-rate argument, because it prices empty rooms into the answer. Two scenarios: 90% at $110 gives you $99 RevPAR. 65% at $160 gives you $104. The second hotel is quieter, cleans less, uses less linen and less staff, and earns more per room. RevPAR is the only one of these three you should be tracking week over week against the same week last year.
The Two Metrics That Look Past the Room
TRevPAR (Total Revenue per Available Room) takes all revenue — rooms, restaurant, bar, spa, excursions, transfers, guided fishing, whatever your property sells — and divides it by available rooms. For a city hotel where the room is 90% of the bill, TRevPAR barely differs from RevPAR. For a remote lodge where guests eat every meal on-site and book excursions, the gap is enormous and it's where the business actually lives.
If TRevPAR is well above RevPAR at your property, you're not really running a room-selling operation, and you shouldn't be managing it like one. That changes what you promote, which guest segments you chase, and what you'll accept on room rate to capture the rest of the spend.
GOP (Gross Operating Profit) is total revenue minus operating expenses — payroll, utilities, supplies, commissions, maintenance — before rent, insurance, interest, taxes, and depreciation. It's the honest measure of how well you run the hotel, stripped of decisions made by whoever financed or owns the building. Two identical properties can have identical GOP and wildly different bottom lines because one carries a mortgage. GOP is what management is accountable for.
The Two Cost Ratios That Explain Where GOP Went
Cost of Sales (%) is direct cost divided by the revenue it produced, tracked per department. Food cost against food revenue, beverage cost against beverage revenue. If your restaurant runs 38% food cost and last year it ran 31%, something has moved — supplier prices, portion control, waste, theft, or a menu mix that's shifted toward low-margin dishes. The percentage doesn't tell you which. It tells you to go look.
Payroll (%) is total labor cost — wages plus employer contributions, overtime, and benefits, not just gross salaries — divided by total revenue. This is usually the largest single line in a hotel's costs and the one most sensitive to seasonality. A remote property that keeps a full team through a slow shoulder month will watch payroll percentage spike even though nobody's doing anything wrong. That's the number to look at when deciding whether a low-season promotion is worth running: if it covers variable cost and helps carry fixed payroll, a discounted room can be rational even at a rate you'd never publish in high season.
The Three Numbers That Tell You If You Survive
EBITDA is earnings before interest, taxes, depreciation, and amortization. It's GOP minus the remaining operating costs but before financing and accounting decisions. Buyers, lenders, and investors value hotels on EBITDA multiples, which is why it matters even if you never intend to sell — it's the number that determines what your property is worth to someone else.
Break-even point is the revenue level where you cover all costs and profit is zero. Work it out as fixed costs divided by contribution margin, then convert it into occupancy at your realistic ADR. If your fixed costs are $40,000 a month, your ADR is $140, and your variable cost per occupied room is $35, you need roughly 381 room-nights to break even — about 64% occupancy in a 20-room, 30-day month. Knowing that single number reframes every rate decision you make. Below it, you're funding the hotel out of pocket. Above it, most of the incremental rate drops to profit.
Cash flow is money actually in the account. This is the one that closes hotels. A property can post a profitable year and fail in September because guests paid by OTA on 30-day terms, the boiler died, and payroll is due Friday. Profit is an accounting opinion about a period; cash is a fact about a date. Seasonal properties in particular need a month-by-month cash projection, not just an annual P&L — the annual number can look healthy while three specific months are underwater.
Where to Start
Pick three: RevPAR, payroll percentage, and your break-even occupancy. Track them monthly against the same month last year. RevPAR tells you whether your commercial strategy is working, payroll tells you whether your cost structure fits your season, and break-even tells you which months are real and which are charity.
The other seven matter, but they're diagnostics — you reach for them when one of the three moves and you need to know why.
Which of these do you actually review every month? Reply and tell me — I'm curious how many independents track past occupancy.
Written by
Seba Blanco
I help independent hotels sell more effectively and operate smarter by combining hotel technology with sales and marketing.