ADR, occupancy and RevPAR are the core metrics of any short-stay investment. ADR (average daily rate) is the average price achieved per night sold; occupancy is the share of available nights that were sold; RevPAR (revenue per available room) combines the two. NOI (net operating income) then shows what is left after operating costs.
What is ADR and how is it calculated?
ADR is the average room revenue per night sold: room revenue divided by the number of nights sold. Complimentary nights and owner-use nights are excluded from the denominator.
On its own, ADR shows the level of pricing, not how busy the apartment was. A high ADR can still produce a weak result if few nights are sold. When reading a statement, check whether ADR is shown including or excluding VAT.
What does the occupancy rate tell you?
Occupancy is the number of nights sold divided by the number of nights available. An apartment let for 18 nights in a 30-night month has an occupancy of 60%.
What counts as an ‘available’ night matters. Owner stays are usually treated separately in reporting, so it is worth checking how your statement handles them. At HillGate, owner stays take place within pre-agreed limits and are booked in the same reservation system as guest bookings.
ADR, occupancy and RevPAR: why is RevPAR the most telling?
Because RevPAR captures price and demand in a single number. It can be calculated either as room revenue divided by available nights, or as ADR multiplied by occupancy – both give the same result.
RevPAR helps answer whether higher occupancy at a lower rate beats a higher rate with fewer guests. Revenue management is, in essence, the continuous optimisation of this figure through pricing and distribution decisions.
RevPAR is still a revenue measure, however: it ignores costs and any income other than accommodation. For an investor, NOI is the next step.
What is NOI and why does it matter to investors?
NOI, or net operating income, is operating revenue minus operating expenses. It is measured before debt service, capital expenditure, depreciation and income tax.
That makes NOI a measure of the property’s own operating performance, regardless of whether you bought with a mortgage or cash, or how you hold the asset for tax purposes. Those items should be layered on individually, ideally with a tax adviser in your home country and in Hungary.
A worked example with illustrative round numbers
The figures below are invented purely for illustration. They do not represent HillGate’s prices, costs or expected results. The example takes a 30-night month for a hypothetical apartment.
| Item (illustrative) | Value |
|---|---|
| Nights available | 30 |
| Nights sold | 18 |
| Occupancy | 60% |
| ADR (excluding VAT) | EUR 100 |
| Room revenue (18 × 100) | EUR 1,800 |
| RevPAR (1,800 / 30, or 100 × 60%) | EUR 60 |
| OTA commission | −EUR 180 |
| Management fee (in this example, 25% of revenue after commission) | −EUR 405 |
| Cleaning and linen | −EUR 200 |
| Utilities | −EUR 150 |
| Service charge and insurance | −EUR 150 |
| NOI for the month | EUR 715 |
A single month is not representative: seasonality means peak and quieter months can differ widely, so metrics are best judged over a full year. Note too that the basis for fees – gross or net revenue, before or after commission – varies from contract to contract.
How the HillGate model works
The HillGate income model uses three scenarios of 160, 220 and 250 nights let per year, equivalent to annual occupancy of roughly 44%, 60% and 68%. It assumes a 25% management fee on net revenue, 5% VAT on accommodation services and a service charge of EUR 4 per m² per month. The model is illustrative and not a promise of returns; see the income model for details.
What drives these metrics?
A few factors move the numbers most; some are market conditions, others depend on the operator’s decisions.
- Seasonality – demand shifts month by month, moving both ADR and occupancy. Our article on Hévíz tourism statistics shows the demand pattern in the region.
- Channel mix – direct bookings carry no OTA commission, while online travel agencies such as Booking.com charge a percentage of the booking value. Booking.com states that its rate varies by country and can also vary by property type and location.
- Length of stay – shorter stays mean more changeovers, and so more cleaning and laundry for the same number of nights.
- Pricing – dynamic pricing adjusts rates to demand, targeting RevPAR rather than ADR or occupancy in isolation.
- Cost structure – NOI depends not only on revenue but on the balance of per-stay and fixed costs. Efficient operations, such as keyless check-in and individual utility metering, can improve the result on the cost side.
Be careful with market benchmarks. Hotel statistics usually refer to hotel rooms, which have a different cost structure and stay pattern from a self-contained apartment. A comparison is only meaningful when it uses the same period, the same location and the same definitions – for example, with or without VAT, and with or without owner stays.
How should you read an owner statement?
An owner statement is the monthly report that takes the owner from gross revenue to the amount paid out for the period. A good statement lets you derive the metrics above directly or in a few steps.
Points worth checking:
- How many nights were available, how many were sold and how many were owner stays.
- Whether ADR and room revenue are shown including or excluding VAT.
- Revenue and commission by booking channel.
- The basis of the management fee, and which other costs are recharged.
- Year-to-date performance compared with the previous period.
At HillGate, the operator issues a detailed monthly owner statement. What the operator handles, from revenue management to housekeeping, is covered in our article on short-term rental management in Hungary, and the purchase itself in buying a new-build apartment in Hungary.
Frequently asked questions
What is the difference between ADR and RevPAR?
ADR is the average price per night sold, while RevPAR is room revenue spread across all available nights. RevPAR therefore reflects occupancy as well: it equals ADR multiplied by occupancy.
What is a good occupancy rate for a holiday apartment?
It depends on location, seasonality and pricing, so there is no universal benchmark. Occupancy is best judged alongside ADR, through RevPAR.
Is NOI the same as the cash I receive?
Not necessarily. NOI is measured before debt service, capital expenditure and income tax; if any of these apply, the amount you actually keep will be lower.
Why does channel mix matter?
Online travel agencies charge a percentage of the booking value as commission, whereas direct bookings avoid that cost. At the same ADR, a higher share of direct bookings means higher net revenue.
What occupancy does the HillGate model assume?
It uses three scenarios of 160, 220 and 250 nights let per year, roughly 44%, 60% and 68% annual occupancy. The model is illustrative and not a promise of returns.
