Average Daily Rate (ADR) is one of the most critical Key Performance Indicators (KPIs) in the hospitality industry. It measures the average rental income per paid occupied room in a given time period. ADR allows hotel managers to compare their performance against competitors and historical data to measure the effectiveness of their pricing strategy.
How to Calculate ADR
The formula for calculating ADR is straightforward:
ADR = Total Rooms Revenue / Number of Rooms Sold
For example, if a hotel generates $15,000 in revenue from selling 120 rooms in a single night, the ADR would be:
$15,000 / 120 = $125.00.
Note: Do not include complimentary rooms or house use rooms in the "Rooms Sold" figure, as this dilutes the ADR.
ADR vs. RevPAR: What's the Difference?
While ADR tells you how much you are selling your rooms for on average, it does not account for occupancy. This is where RevPAR (Revenue Per Available Room) comes in.
ADR focuses on price optimization.
RevPAR focuses on revenue management efficiency (filling rooms at the best price).
Our calculator above provides both metrics if you input your total inventory count, helping you get a complete picture of your property's financial health.
Strategies to Improve Your ADR
Upselling and Cross-selling: Encourage guests to upgrade rooms or purchase packages.