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What is ADR (average daily rate) in hospitality and how is it calculated?
ADR, average daily rate, is room revenue divided by the number of rooms sold, for a period. It shows the average price paid per occupied room, and excludes unsold rooms from the calculation.
Formula in words: total room revenue divided by rooms sold.
Example: 21,000 currency units of room revenue from 210 rooms sold gives an ADR of 100.
It matters because it shows pricing strength independent of how full the property is.
Commonly misread:
- Including taxes, breakfast or other charges in room revenue in some periods but not others.
- Using it alone: a high ADR with low occupancy may earn less than a lower ADR with higher occupancy.
- Comparing across room types or seasons without adjusting for mix.
Use it with occupancy and RevPAR.
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