Average Daily Rate
ADR indicates the average revenue earned for an occupied room on a given day. The average daily rate is one of the key performance indicators (KPI) of the hotel industry. Higher ADR means better hotel performance, as it reveals that a hotel its increasing its revenue from renting rooms.
An efficient way for hotels to increase ADR is to find ways to raise the price of rooms.
Combining ADR with occupancy rate, comprises RevPAR. All of these metrics are often used in order to measure the performance of hotels.
Rooms and occasions that are not included in ADR:
- Canceled bookings
- ‘No shows’
- Hotel staff rooms
- Vacant rooms
Only rooms occupied by guests are calculated for ADR. A hotel ADR, can be measured on a monthly, quarterly, or yearly basis. When calculating your ADR for a longer time period it gets more complicated. For example, if you want to know what your ADR is across a monthly period you need to divide your room revenue by the number of rooms and the amount of days in the month.
Ways to increase ADR:
- Monitor competition
- Promote local events and experiences
- Offer deals and promotions
How do you calculate ADR?
Average Daily Rate = Rooms Revenue/ Number of Rooms sold