Potential Average Rate (PAR)

PAR or Potential Average Rate is a very important ratio in the revenue management department. The Potential Avg. Rate (PAR) is a collective statistics that combines the potential average rate, multiple occupancy percentages and the rate spread.

There are two steps involved to calculate the potential average rate

Step 1: Multiplying the Rate Spread by the hotel's Multiple Occupancy Percentage.

Step 2: Add the result from Step 1 to hotel's Average Single Rate which will then give the 'Potential Average Rate (PAR)'

The Formula for Potential Average Rate:

Potential Average Single Rate = (Multiple Occupancy Percentage X Rate Spread) + Potential Average Single Rate

E.g. - Potential Avg. Rate:

Multiple Occupancy Percentage = 5.00

Rate Spread                            = 15.00

Potential Avg. Single Rate         = 100.00

Potential Average Rate (PAR)    = (5.00 X 15.00) + 100

                                             = (75) + 100

                                             = 175