Average Daily Rate (ADR) is a simple metric to determine the performance of a hotel or room type. It is a key performance indicator (KPI) which allows revenue managers to get a quick feeling for how things are going compared with data from previous years or even other hotels with similar rooms on offer.
How is ADR calculated?
ADR is the average price (or “rate”) for all of the rooms booked for a given night. Usually this will be for a single type of room like a standard double, but it can also be calculated for an entire hotel. To calculate ADR, use the following equation:
So for example, if you make £1000 from selling 10 rooms, your ADR is £100. This obviously doesn’t include any rooms that are given away for free, e.g. house use
Why is ADR useful?
If you’ve sold a particular room type for different prices in the months leading up to the night, ADR allows you to very quickly determine how much you are actually making per room so that you can compare it with historic performance from an equivalent night and benchmark the room’s success against other rooms or competitor properties.
ADR with Pace
Pace allows you to instantly calculate ADR for a given room type (or the entire property) on a given day, week or month. This is a quick way to calculate how well your pricing strategy is going.
ADR provides more information than simply looking at Occupancy, but revenue managers often look at the hotel’s revenue per available room (RevPAR) to understand how the revenue is distributed across all rooms in the property, rather than just the occupied ones.