What Is Average Daily Rate?
Average daily rate (ADR) is a hospitality performance metric that shows the average room revenue earned for each room actually sold during a period. Along with occupancy rate and revenue per available room (RevPAR), it is one of the core measures hotel managers track.
ADR is computed by dividing total rooms revenue by the number of rooms sold — not the number available. Because it ignores unsold rooms, it isolates pricing power rather than how full the property is. Raising rates tends to lift ADR, while discounting to fill rooms pushes it down, so the metric is watched closely when setting room rates.
Formula
ADR = Rooms revenue earned ÷ Rooms sold
Applications
- Monitoring a hotel's pricing performance month over month
- Comparing rate results across segments such as retail, corporate, and group
- Setting room-rate strategy together with the occupancy rate
- Computing RevPAR as ADR × occupancy rate
- Reporting performance to owners and investors
Sources
- Hayes, D. K., & Miller, A. A. (2011). Revenue Management for the Hospitality Industry. John Wiley & Sons.