Average Daily Rate - the average rental income per paid occupied room in a given time period.
ADR (Average Daily Rate) measures the average revenue earned per occupied room sold. It's calculated by dividing total room revenue by the number of rooms sold (not total rooms available). ADR is a fundamental pricing metric that helps hotels understand their achieved room rate and compare it against competitors and market rates.
ADR directly impacts profitability. While high occupancy is good, selling rooms at rates that don't cover costs or match market value leaves money on the table. ADR helps revenue managers evaluate pricing strategies, identify opportunities to increase rates, and understand guest willingness to pay across different segments, seasons, and booking channels.
ADR is calculated by dividing room revenue by rooms sold:
ADR = Total Room Revenue ÷ Number of Rooms Sold
Example:
If a hotel sold 80 rooms and earned €12,000 in room revenue: ADR = €12,000 ÷ 80 = €150 This means on average, each room sold generated €150 in revenue.
