Average Daily Rate (ADR)
Average Daily Rate, or ADR, measures the average room revenue earned for occupied rooms during a specified period.
It describes the average rate paid for the rooms that were sold.
How It Is Calculated
A simplified formula is:
Room revenue
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Rooms soldIf a property earns:
$4,000 room revenue
from:
20 occupied rooms
ADR is:
$200
STR defines ADR as room revenue divided by rooms sold. STR hotel benchmarking glossary
What ADR Tells You
ADR answers:
On average, how much room revenue did we earn for each room we sold?
It does not account for unsold rooms.
That makes it useful but incomplete on its own.
ADR vs. Occupancy
Occupancy measures how much inventory was sold.
ADR measures the average room rate earned on sold inventory.
For example:
High occupancy + low ADR
may describe a very different pricing situation from:
Moderate occupancy + high ADR.
Revenue management often involves balancing these dimensions rather than maximizing either one independently.
ADR vs. RevPAR
Revenue per Available Room brings sold and unsold room capacity into the same metric.
ADR considers only rooms actually sold.
RevPAR considers the property's total available room inventory.
Why It Matters
ADR can help evaluate:
- Pricing
- Seasonality
- Promotions
- Channel mix
- Rate Plans
- Revenue strategy
- Year-over-year change
It can also help identify whether an occupancy increase came with significant discounting.
Common Problems
Common interpretation problems include:
- Comparing ADR without considering occupancy
- Comparing different room-revenue definitions
- Ignoring taxes or fees included differently in source systems
- Treating ADR as profitability
- Comparing properties with substantially different room mixes
- Assuming the highest ADR produces the best overall result
How to Improve
Use ADR alongside:
Context turns the average into something actionable.