The Average Daily Rate (ADR) is a key performance indicator (KPI) used in the hospitality industry, particularly by hotels and other accommodation providers. It represents the average rental income earned for each occupied room during a specific period (e.g., a day, week, or month). ADR is calculated by dividing the total room revenue by the total number of rooms sold.
Formula:
ADR = Total Room Revenue / Total Rooms Sold
A higher ADR generally indicates better pricing power and a more successful revenue management strategy. It's crucial for understanding profitability and making informed decisions about pricing, marketing, and operations.
Example:
If a hotel generated $50,000 in room revenue and sold 250 rooms in a month, its ADR would be:
ADR = $50,000 / 250 rooms = $200 per room.
This means, on average, each room sold brought in $200 in revenue.