Potential Annual Revenue

PAR is a planning metric—not a guarantee. Teams use it to set revenue goals, guide budgets, evaluate acquisitions, and align owner expectations. Because it’s forward-looking, keep it tied to real signals: historic seasonality, on-the-books pace, event calendars, and the competitive landscape on Airbnb, Vrbo, Booking.com, and Google Travel (semantic entities).

How PAR Is Used in Vacation Rentals

• Goal setting & budgeting: Translate occupancy/ADR targets into annual revenue plans; size marketing and operating budgets accordingly.
• Pricing strategy: Stress-test dynamic pricing and minimum-stay rules to see how changes lift or suppress PAR.
• Investment & underwriting: Pair PAR with expenses to estimate NOI, Net Rental Yield, and payback periods.
• Owner communications: Share month-by-month PAR vs. actuals to explain seasonality and event impacts.

Components & Formula

PAR = (Expected Occupied Nights × Blended ADR) + Owner-Retained Fees + Ancillary Add-Ons

• Expected occupied nights: 365 (or 366) × target occupancy rate, adjusted for true sellable nights.
• Blended ADR: Weighted average across seasons (peak/shoulder/off-peak) and day-of-week effects.
• Owner-retained fees: Cleaning (per stay), pet, parking, resort/amenity fees you keep (exclude pass-throughs).
• Ancillary add-ons: Rentals (kayaks, bikes), early check-in/late checkout, experiences—only the portion you retain.
• Exclude: Lodging/sales taxes, refundable deposits, platform guest fees you do not receive.

Worked Examples

Example 1 – Beachfront Rental (Single Blended Rate)

• Target occupancy: 70% → 255 nights
• Blended ADR: $300
• Cleaning fee: $100 per stay; average LOS = 5 nights → stays ≈ 255 ÷ 5 = 51

PAR = (255 × $300) + (51 × $100) = $81,300

Example 2 – Mountain Cabin (Seasonal View)

• Peak: 120 nights @ $400 = $48,000
• Off-peak: 100 nights @ $200 = $20,000
• Cleaning fee: $120 per stay; LOS = 4 nights → stays ≈ 220 ÷ 4 = 55 → $6,600

PAR = $48,000 + $20,000 + $6,600 = $74,600

Best Practices

• Segment by season: Build a monthly calendar with specific ADR and occupancy targets. See Seasonality.
• Use RevPAR when helpful: Room revenue can be approximated as RevPAR × total available nights; then add owner-retained fees.
• Validate with pace: Compare PAR to on-the-books reservations; re-forecast when pace diverges materially.
• Keep assumptions visible: Document how you treat fees, taxes, and LOS so PAR is comparable across assets.

Related Terms

• Average Daily Rate (ADR)
• Occupancy Rate
• Revenue per Available Room (RevPAR)
• Gross Booking Revenue (GBR)
• Net Operating Income (NOI)
• Dynamic Pricing
• Seasonality
• Length of Stay (LOS)

Frequently Asked Questions

Is PAR the same as budget?

PAR informs the revenue line of your budget, but a full budget layers in marketing, operations, CapEx plans, and risk adjustments.

How often should I update PAR?

Quarterly at minimum; monthly in seasonal markets. Refresh after material price changes, new regulations, or event announcements that alter demand.

Can I build PAR from RevPAR instead of ADR?

Yes. Room revenue = RevPAR × total available nights. Then add owner-retained fees and ancillary income for full PAR.

What if my cleaning fee is paid to a third party directly?

If you do not retain the fee, exclude it from PAR. Only include revenue you actually receive.

How do cancellations and refunds factor in?

PAR is a projection; many operators apply a small allowance for expected refunds/no-shows based on history to make PAR more realistic.