It is a scenario every hotel leader has witnessed: It is the first week of the month, and the Revenue Manager walks into the meeting with good news: 'We did it, RevPAR is up 5% year-over-year and we beat the compset'.

There are high-fives around the table. The Commercial Team feels like they have won. But at the other end of the table, the General Manager and Finance Director are quiet. They are reviewing the bank account and P&L, and the numbers don't align with the celebration. The cash flow isn't reflecting the "victory."

This is the Profit Paradox.

For decades, the hotel industry has treated RevPAR (Revenue Per Available Room) as the ultimate "North Star" for performance. It is the metric that drives bonuses, defines strategies, and dominates board reports. But relying solely on RevPAR in today's complex distribution landscape is dangerous. It tells you how well you filled your rooms and at what price, but it completely ignores the cost of getting those guests through the door.

We have built businesses where departmental "wins", such as a Sales team hitting a volume target or Revenue Management spiking occupancy, can actually undermine overall profit if the cost of that revenue is too high.

The hard truth is that not all revenue is created equal. A dollar from a loyal corporate guest is not worth the same as a dollar from a high-commission OTA booking. If you are only optimizing for RevPAR, you might be winning the top-line battle while losing the bottom-line war.

To truly understand your business health, you need to evolve the conversation from "How full are we?" to "How profitable is our strategy?" It is time to move beyond the spreadsheet disputes and embrace a metric that tells the whole story: NetRevPAR.

The RevPAR Trap: Why "Busy" Doesn't Mean "Profitable."

In many hotels, "busy" is the ultimate goal. If the lobby is full, the restaurant is buzzing, and housekeeping is scrambling to turn rooms, it feels like success. But this activity can be deceptive.

The core issue lies in departmental silos. When you incentivize teams based on isolated metrics, you often get conflicting strategies that hurt the overall business.

• Sales teams might close high-volume corporate deals at discounted rates just to hit a room-night target.
• Revenue Managers might push inventory to high-commission OTAs just to spike occupancy and RevPAR index.
• Marketing might spend heavily on broad campaigns that drive traffic but not necessarily high-value bookings.

These "wins" look great on individual departmental reports, but they can sabotage your total profit. You are essentially paying too much to be busy.The flaw in RevPAR is simple: it is a gross revenue metric. It calculates Room Revenue / Available Rooms but ignores the Customer Acquisition Cost (CAC) required to generate that revenue.

Let’s look at a simple example:

Imagine two bookings for the same night:

• Booking A: A guest books via Booking.com at a rate of $200.Commission (18%): -$36Transaction Fees: -$4Net Revenue to Hotel: $160

• Booking B: A loyal guest books directly on your website at a loyalty rate of $180.Commission: $0Transaction Fees: -$4Net Revenue to Hotel: $176

If you look only at RevPAR, Booking A ($200) appears to be the winner. It increases your ADR and makes your top-line report stand out.

But if you look at your bank account, Booking B ($180) is actually 10% more profitable.

This is the RevPAR Trap. By chasing the higher gross rate of Booking A, you are unknowingly prioritizing a less profitable strategy. You are "winning" the revenue game but losing the profit game. To fix this, we need a metric that tells the truth.

Enter NetRevPAR: The "Truth Serum" for Hotels

If RevPAR is the vanity metric, NetRevPAR (Net Revenue Per Available Room) is the sanity metric.

To address the profit paradox, we must stop viewing top-line revenue in isolation. We need a metric that acts as a "truth serum" for your commercial strategy—one that reveals how much of that revenue actually stays in the bank.

What is NetRevPAR?

NetRevPAR applies a critical filter to the standard RevPAR formula: it subtracts the cost of acquiring the guest.

The Formula:

NetRevPAR = (Room Revenue - Customer Acquisition Costs) / Total Available Rooms

What counts as an "Acquisition Cost"?

In the Demand Calendar philosophy, we strip away the "hidden" costs that inflate your top line but deflate your bottom line:

• Commissions: The 15-25% cut taken by OTAs like Booking.com or Expedia.
• Transaction Fees: The GDS fees and booking engine costs.
• Loyalty Costs: The expense of points, amenities, and program fees associated with brand loyalty members.
• Sales and Marketing Spend: The direct sales costs and digital ad spend required to capture the booking (e.g., Google Ads, Metasearch).

Why does this change everything?

When you switch your focus to NetRevPAR, you move beyond simply trying to "fill the house." You begin to analyze the Net Contribution of every channel and segment.

For the first time, you can answer the most critical question in hotel management: Who are my most profitable guests?.

You might discover that your "best" corporate account, the one delivering 1,000 room nights a year, is actually dragging down your profitability because of high commission structures and transaction fees. Conversely, a smaller segment with lower volume but zero acquisition costs might be your true profit driver.NetRevPAR forces the entire commercial team, Sales, Revenue, and Marketing, to align around a single, honest goal: Profit Contribution, not just volume.

Continue to read about "Why NetRevPAR changes your strategy" here.