The Case Against RevPAR (and What to Read Instead)

The 2025 numbers landed in January 2026. CoStar reported that the U.S. hotel industry posted its first full-year decline in occupancy and RevPAR since 2020. The headline made every trade-press front page. The interpretation that followed was familiar: occupancy soft, ADR holding, the cycle turning.

That headline is not wrong. It is just not useful.

If you read trade press for a living and you own or operate one or several hotels, you have already noticed that the most-reported metric in your industry is also the one that most consistently misleads about whether your business is actually working. This is the case against RevPAR. It has been made well by HotStats and others for years. It is worth making again because the alternatives are still not what most operators put on the cover page of their quarterly report.

What RevPAR is, and what it isn't

RevPAR is room revenue divided by available rooms. It captures two things: the rate you sold rooms at, and the share of rooms you sold. It captures nothing else. Not your food and beverage. Not your spa, parking, or ancillary revenue. Not your labor cost. Not your commissions. Not your management fees. Not your debt service.

For decades, RevPAR survived as the industry's lingua franca because the structure of hotel revenue was simple enough that rooms were the dominant line. That structure has changed. Ancillary revenue is now a larger share of the bill at many full-service properties. The cost side has moved faster than the revenue side for most of the last three years. And distribution costs have grown faster than rooms revenue, which means the gap between gross revenue and net revenue is wider than RevPAR can see.

HotStats puts it more bluntly. It identifies three structural reasons RevPAR cannot be trusted: it ignores all ancillary revenue, it is blind to all costs, and it is a relic of an analytics era that has been superseded by departmental profit and GOPPAR.

What the data actually says

The numbers from 2024 and 2025 illustrate the point in a way that should be uncomfortable.

For every $1 of incremental top-line revenue U.S. hotels added in 2024, they added $1.04 in costs. $0.75 of that incremental cost came from labor. Flow-through in the U.S., the share of incremental revenue that drops to gross operating profit, was negative 4 percent. The U.S. was the only major global region to contract on GOP margin that year.

A property could have had a perfectly respectable RevPAR result in 2024 and still have lost money at the GOP line. Many did.

The 2025 labor story is the same shape. Hotel labor cost per hour rose roughly 8 percent year over year on top of an already elevated base. The properties that grew RevPAR last year mostly did so by pushing rate, which carries less labor than pushing occupancy. The properties that grew RevPAR by pushing occupancy paid a larger labor bill to do it. Two hotels can report the same RevPAR result with completely different P&L outcomes.

A separate but related shift is happening on the distribution side. HotStats has reported that global RevPAR has grown about 19 percent since 2019, while distribution cost per available room has grown about 25 percent over the same window. OTA base commissions remain in the 15 to 25 percent range; Booking.com Preferred Partner status adds another 2 to 3 percent on top; Genius adds a host-funded 10 to 20 percent discount layered above. Distribution is outrunning rooms revenue, which means net RevPAR is materially below gross RevPAR, and the gap is widening.

What to look at instead

The right metric depends on whose desk you sit at.

If you are the owner. Read TRevPAR (total revenue per available room, including everything that gets sold on property), GOPPAR (gross operating profit per available room, calculated per the Uniform System of Accounts for the Lodging Industry), EBITDA per key, and cash-on-cash return. These are the metrics that capture both sides of the income statement. If your operator only reports RevPAR back to you, ask for the GOP department-level flow-through breakdown.

If you are the general manager. Read GOPPAR, flow-through by department, departmental labor cost per occupied room, and the productivity ratios you actually control. RevPAR is mostly an output of decisions made above you (rate strategy, distribution mix, brand standards). GOPPAR is an output of decisions you can move.

If you are the asset manager. Read NOI per key and the debt-service coverage ratio. CMBS lenders typically require a DSCR of 1.40 to 1.50x for hotel loans versus 1.20 to 1.25x for other commercial real estate, which tells you how the debt markets see hotel risk. If you are within ten basis points of your covenant, you are operating in a different regime than a property running 1.80x, regardless of which one reports a higher RevPAR.

For asset managers serving as fiduciaries to limited partners, NOI per key is also the only metric that translates cleanly across property type and market. You can compare the New Orleans select-service to the New York full-service on the same axis. RevPAR cannot do that.

The distribution number you should already be tracking

Most hotels do not report net RevPAR, RevPAR after commissions, transaction fees, and loyalty-acquisition costs, even internally. They should. The gap between gross RevPAR and net RevPAR is, for most properties in 2026, somewhere between 8 and 22 percent depending on channel mix. That gap is your distribution cost as a percentage of room revenue, and it is the line item most operators have the least visibility into.

If you want to know whether your distribution strategy is working, do not look at how RevPAR moved. Look at whether net RevPAR moved by the same amount. If gross RevPAR grew 3 percent and net RevPAR was flat, the OTA channel was a tax on growth, not a contributor.

What the 2026 forecast is saying

CoStar's 2026 U.S. forecast calls for ADR up 1.0 percent, occupancy slipping to 62.1 percent, and RevPAR up 0.6 percent year over year. The AHLA's 2026 State of the Industry projects hotel guest spend at about $805 billion (up 1.7 percent), wages and benefits at about $131 billion, and 2.2 million direct hotel jobs.

That is a year of essentially flat top-line growth against persistent labor and distribution cost pressure. RevPAR will be approximately flat at the industry level. The variance in actual operating outcomes between two hotels reporting the same flat RevPAR will be wider than at any point in the last decade.

Which means the question owners should be asking, at the cover-page level of next quarter's report, is not whether RevPAR moved. It is whether GOPPAR did, what direction net RevPAR went, and what the flow-through looked like by department.

The deeper point

RevPAR is not a bad metric. It is a useful one. It is just not the metric that tells you whether your hotel is healthy, whether your operator is doing a good job, or whether your asset is performing relative to the capital that built it.

The reason it stays on the cover page anyway is that everybody reports it, and the brands and franchisors organize their performance conversations around it. That is a coordination outcome, not a finance outcome.

If you are reading your operator's quarterly report and the first thing on it is a chart of RevPAR by month, you are reading a marketing document. Ask for the report that has GOPPAR, net RevPAR, and flow-through by department on the cover. That report exists. It is just less likely to be the one that gets handed to you first.