Performance & revenue
ADR
Also written: average daily rate
What ADR means
Average Daily Rate measures the average rental revenue earned per occupied room in a given period. Excluding unoccupied rooms and complimentary stays, it indicates the baseline pricing power and room yield of a property across different market segments.
Formula
ADR = Total Room Revenue / Paid Rooms Occupied
How it is used
Revenue managers use ADR to evaluate pricing strategy against competitors and demand curves. It drives decisions on yield management, room rate tiering, and promotional discounting. Because ADR ignores unsold inventory, operators evaluate it alongside occupancy; raising rates may increase ADR while suppressing volume, directly impacting total room revenue. Investors analyze ADR trends to assess brand positioning, asset class performance, and potential net operating income growth.
Worked example
A hotel generates $18,000 in room revenue on a Tuesday night. It sold 120 rooms and issued 5 complimentary rooms to VIPs. Excluding the 5 complimentary stays, the calculation uses 120 paid rooms: $18,000 divided by 120 equals an ADR of $150.
Common mistake
Including unpriced complimentary rooms or total available rooms instead of paid occupied rooms in the denominator artificially skews the rate downward.
Related terms
Work it out
RevPAR Calculator — Work out revenue per available room from occupancy and rate — or from total revenue.