What is ADR?
Updated
ADR, or average daily rate, is room revenue divided by the number of rooms actually sold, so it tells you the average price guests paid per room per night.
Why does it matter to a small hotel?
ADR answers one question: what did a sold room actually fetch? It is not the rate you advertise. Discounts, member rates, packages and mixed room types all pull it away from the rack rate, so the gap between the two is worth knowing. ADR on its own can mislead. You can lift it by selling fewer, dearer rooms and end the night worse off, which is why it should always be read beside occupancy and RevPAR. The formula is room revenue ÷ rooms sold, and you should leave out taxes and anything that is not a room charge.
A worked example
On a midweek autumn night the 24-room hotel sells 16 rooms and takes £1,760 in room revenue. ADR is £1,760 ÷ 16 = £110. On a summer Saturday it sells 22 rooms for £3,630, so ADR is £165. The annual average sits between the two and depends on how many of each kind of night you sell. If a booking comes through a channel that takes commission, ADR is normally still counted before that cost. If you would like ADR tracked next to what nearby hotels charge, try RatePulse free.
Related terms
Questions people ask
Is ADR the same as my room rate?
Not usually. Your rate is the price you set. ADR is the average of what was actually paid, after offers and across every room type sold.
Should ADR include breakfast?
Only if breakfast is bundled into the room price and you cannot split it out. Where you can, report room revenue and food revenue separately so ADR is comparable over time.
Can a rising ADR be bad news?
Yes. If occupancy falls faster than the rate rises, RevPAR drops. Always read ADR with occupancy.