Definition
A RevPAR index compares a hotel's RevPAR with that of a defined competitive set, showing whether the hotel is taking more or less than its fair share of the revenue in its market.
Also called: RGI · Revenue Generation Index · Market Penetration Index
In practice
Because there is no universal RevPAR benchmark, the index is how performance becomes comparable. An index of 100 means the hotel is earning its proportionate share of the competitive set's room revenue; above 100 means it is outperforming, below means it is losing share.
The index is only as honest as the competitive set behind it, which is why that set matters as much as the number. In a management contract an operator will naturally prefer a flattering comparison group; an owner wants a genuinely comparable one, named in the contract rather than chosen later.
The index is also one half of a well-constructed performance test, paired with a profit hurdle. On its own it can be satisfied by a market that is weak for everyone, which is why both measures belong in the clause.
Why it matters to an owner
A persistently sub-100 RevPAR index, while full brand fees are being paid, is the clearest early signal that the brand or the operating team is not delivering what it is being paid for.
Frequently Asked Questions
That the hotel is capturing its proportionate share of room revenue within its competitive set — neither outperforming nor underperforming the market it is measured against.
It should be negotiated and named in the contract rather than selected afterwards. An operator benefits from a flattering set, so an owner needs a genuinely comparable one to make the index meaningful.