What is normalized revenue?

Normalized revenue (or norm rev) calculates a property's revenue potential over a full year, even if the home was not available for the entire year. This metric is "trended up" to estimate a full-year performance.

How it’s calculated:

1. Determine the Revenue Per Available Night (RevPAN):
   • Example: If a home generates $100,000 in 300 available days, RevPAN is $333.
2. Normalize for a full year (365 days):
   • Multiply RevPAN by 365 days: $333 x 365 = $121,645 (normalized revenue).

Why we use normalized revenue:

• Useful for comparing homes on a standardized basis (e.g., homes with varying availability).
• Helps estimate the full-year revenue potential for homes that were available for less than 365 days.

Note that normalized revenue works best for properties available for at least 270+ days in a year. Also be cautious when normalizing homes with limited availability, especially if their available period coincides with peak or high seasons. Revenue projections may become distorted if high-season rates are extended across the entire year.

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