ADR (Average Daily Rate)
ADR (Average Daily Rate) is a core hotel performance metric that measures the average revenue earned per occupied room over a given period. It is one of the three primary KPIs used in the hospitality industry, alongside occupancy rate and RevPAR (Revenue per Available Room).
Formula
ADR = Room Revenue / Number of Rooms Sold
Rooms sold excludes complimentary rooms and rooms occupied by staff.
Example
If a hotel generates $50,000 in room revenue from 250 occupied rooms in a week: ADR = $50,000 / 250 = $200.
Why ADR matters
- Pricing performance — ADR shows how effectively a property is pricing its rooms, independent of how full the hotel is.
- Benchmarking — Hotels compare their ADR against a competitive set (comp set) to gauge market positioning.
- Revenue management — Revenue managers use ADR alongside occupancy to optimize the rate/volume trade-off and maximize RevPAR.
- OTA strategy — On online travel agencies like Booking.com, parity and promotional discounting decisions are typically measured by their impact on ADR.
ADR vs. RevPAR
ADR only reflects rooms that were actually sold, while RevPAR spreads revenue across all available rooms (sold or not): RevPAR = ADR × Occupancy Rate. A hotel can have a high ADR but low RevPAR if occupancy is weak — a signal that rates may be too high for current demand.