How To Calculate Average Daily Rate

ADR Formula:

\[ ADR = \frac{\text{Total Revenue}}{\text{Rooms Sold}} \]

Average Daily Rate (ADR):

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1. What is Average Daily Rate (ADR)?

Average Daily Rate (ADR) is a key performance metric in the hotel industry that measures the average revenue earned per occupied room per day. It provides insight into the pricing strategy and revenue management effectiveness of a hotel property.

2. How Does the Calculator Work?

The calculator uses the ADR formula:

\[ ADR = \frac{\text{Total Revenue}}{\text{Rooms Sold}} \]

Where:

\( \text{Total Revenue} \) — Total room revenue for a given period (currency)
\( \text{Rooms Sold} \) — Total number of rooms sold during the same period (units)

Explanation: ADR calculates the average price at which hotel rooms are sold, excluding complimentary rooms and rooms used for staff.

3. Importance of ADR Calculation

Details: ADR is crucial for hotel revenue management as it helps monitor pricing strategies, compare performance against competitors, and optimize room rates to maximize profitability while maintaining occupancy levels.

4. Using the Calculator

Tips: Enter total room revenue in your local currency and the total number of rooms sold during the period. Both values must be positive numbers (revenue > 0, rooms > 0).

5. Frequently Asked Questions (FAQ)

Q1: What is a good ADR for hotels?
A: A good ADR varies by hotel type, location, and season. Luxury hotels typically have higher ADRs than budget hotels. Compare against local competitors and historical performance.

Q2: How does ADR differ from RevPAR?
A: ADR measures average room rate, while RevPAR (Revenue Per Available Room) considers both rate and occupancy: RevPAR = ADR × Occupancy Rate.

Q3: Should complimentary rooms be included in ADR calculation?
A: No, complimentary rooms and staff rooms should be excluded from the rooms sold count when calculating ADR.

Q4: How often should ADR be calculated?
A: ADR is typically calculated daily, but can also be calculated weekly, monthly, or annually for different analytical purposes.

Q5: What factors affect ADR?
A: Seasonality, day of week, local events, competition, hotel amenities, booking channels, and length of stay all influence ADR.