Average Daily Rate (ADR) Calculator
Use this tool to calculate the Average Daily Rate (ADR) for a hotel or accommodation property over a specific period, typically a single day. ADR is a key performance indicator (KPI) that measures the average revenue earned per occupied room per day.
Enter the **Total Room Revenue** earned and the **Total Number of Rooms Sold** during the period you are analyzing.
Calculate Your ADR
Understanding Average Daily Rate (ADR)
What is ADR?
Average Daily Rate (ADR) is a crucial metric used in the hospitality industry to indicate the average revenue generated from each occupied guest room in a hotel over a certain period. It's calculated by dividing the total room revenue by the number of rooms sold.
ADR Formula
The formula is straightforward:
ADR = Total Room Revenue / Total Number of Rooms Sold
This KPI helps hotels understand their pricing strategy's effectiveness and compare performance against competitors.
Why is ADR Important?
ADR provides insight into:
- Pricing Performance: Helps assess if rooms are being sold at optimal rates.
- Revenue Management: A key component for yield management and forecasting.
- Benchmarking: Used to compare performance year-over-year or against industry standards and competitors (CompSet).
- Profitability: While not a direct measure of profit, higher ADR generally contributes to higher profitability, assuming costs remain relatively stable.
It's important to note that ADR only considers *occupied* rooms and doesn't account for vacant rooms. For a broader measure that includes occupancy, see RevPAR (Revenue Per Available Room).
ADR Calculation Examples
See how ADR is calculated in different scenarios:
Example 1: Weekend Stay
Scenario: A small hotel earned $4,500 from 30 rooms sold on a Saturday night.
1. Known Values: Total Room Revenue = $4,500, Total Rooms Sold = 30.
2. Formula: ADR = Total Room Revenue / Total Rooms Sold
3. Calculation: ADR = $4,500 / 30
4. Result: ADR = $150.00
Conclusion: The average revenue per occupied room was $150.
Example 2: Mid-Week Business Travel
Scenario: A city hotel earned $8,800 from 80 rooms sold on a Tuesday.
1. Known Values: Total Room Revenue = $8,800, Total Rooms Sold = 80.
2. Formula: ADR = Total Room Revenue / Total Rooms Sold
3. Calculation: ADR = $8,800 / 80
4. Result: ADR = $110.00
Conclusion: The ADR for Tuesday was $110, lower than the weekend rate in Example 1.
Example 3: Busy Holiday Period
Scenario: During a major holiday, a resort made $25,000 from 150 rooms sold.
1. Known Values: Total Room Revenue = $25,000, Total Rooms Sold = 150.
2. Formula: ADR = Total Room Revenue / Total Rooms Sold
3. Calculation: ADR = $25,000 / 150
4. Result: ADR ≈ $166.67
Conclusion: High demand allowed the resort to achieve a higher ADR.
Example 4: Low Season
Scenario: In the off-season, a motel generated $1,200 from only 25 rooms sold.
1. Known Values: Total Room Revenue = $1,200, Total Rooms Sold = 25.
2. Formula: ADR = Total Room Revenue / Total Rooms Sold
3. Calculation: ADR = $1,200 / 25
4. Result: ADR = $48.00
Conclusion: Lower demand and potentially lower rates result in a significantly lower ADR.
Example 5: Group Booking
Scenario: A hotel has a group booking where 50 rooms are sold for a total of $6,000.
1. Known Values: Total Room Revenue = $6,000, Total Rooms Sold = 50.
2. Formula: ADR = Total Room Revenue / Total Rooms Sold
3. Calculation: ADR = $6,000 / 50
4. Result: ADR = $120.00
Conclusion: Group rates can sometimes influence the overall ADR for the period.
Example 6: Boutique Hotel
Scenario: A high-end boutique hotel earned $7,500 from just 15 rooms sold on a specific night.
1. Known Values: Total Room Revenue = $7,500, Total Rooms Sold = 15.
2. Formula: ADR = Total Room Revenue / Total Rooms Sold
3. Calculation: ADR = $7,500 / 15
4. Result: ADR = $500.00
Conclusion: Premium pricing reflects in a very high ADR for this luxury property.
Example 7: Budget Accommodation
Scenario: A budget inn earned $900 from 30 rooms sold.
1. Known Values: Total Room Revenue = $900, Total Rooms Sold = 30.
2. Formula: ADR = Total Room Revenue / Total Rooms Sold
3. Calculation: ADR = $900 / 30
4. Result: ADR = $30.00
Conclusion: ADR reflects the lower price point characteristic of budget accommodations.
Example 8: Monthly Calculation
Scenario: A hotel earned $300,000 in total room revenue for a month, having sold 2,500 rooms.
1. Known Values: Total Room Revenue = $300,000, Total Rooms Sold = 2,500.
2. Formula: ADR = Total Room Revenue / Total Rooms Sold
3. Calculation: ADR = $300,000 / 2,500
4. Result: ADR = $120.00
Conclusion: ADR can be calculated for periods other than a single day, using total revenue and rooms sold for that period.
Example 9: High Occupancy, Standard Rates
Scenario: A hotel sells 95 rooms out of 100 available, earning $14,250.
1. Known Values: Total Room Revenue = $14,250, Total Rooms Sold = 95.
2. Formula: ADR = Total Room Revenue / Total Rooms Sold
3. Calculation: ADR = $14,250 / 95
4. Result: ADR = $150.00
Conclusion: High occupancy doesn't directly impact ADR calculation itself, but it affects overall revenue and related metrics like RevPAR.
Example 10: Special Event Pricing
Scenario: During a major event, a hotel sells 70 rooms for a total of $17,500.
1. Known Values: Total Room Revenue = $17,500, Total Rooms Sold = 70.
2. Formula: ADR = Total Room Revenue / Total Rooms Sold
3. Calculation: ADR = $17,500 / 70
4. Result: ADR = $250.00
Conclusion: Strategic pricing during peak demand periods significantly increases ADR.
Frequently Asked Questions about ADR
1. What exactly is Average Daily Rate (ADR)?
ADR is a hospitality industry metric that measures the average revenue generated per *occupied* room in a hotel over a specific period, usually one day.
2. How is ADR calculated?
The formula is: ADR = Total Room Revenue / Total Number of Rooms Sold.
3. What is "Total Room Revenue"?
This is the total income generated *solely* from the sale of guest rooms during the period being measured. It typically excludes revenue from other sources like food & beverage, parking, or gift shops.
4. What counts as "Rooms Sold"?
These are the rooms that were occupied by paying guests during the period. Rooms occupied by staff, complimentary rooms, or rooms not available for sale are usually excluded.
5. Why is ADR important for hotels?
It's a key performance indicator (KPI) that helps hoteliers evaluate their pricing strategies, compare performance against competitors, manage revenue, and make informed decisions about rates and promotions.
6. Can ADR be calculated for periods longer than a day?
Yes, while "Daily" is in the name, ADR can be calculated for any period (week, month, year) by using the total revenue and total rooms sold for that entire period.
7. What is considered a "good" ADR?
What constitutes a "good" ADR varies greatly depending on the hotel's location, market segment (budget, luxury, etc.), amenities, and the specific time period. It's best evaluated in comparison to the hotel's historical performance and its competitive set (CompSet).
8. Can ADR be zero?
ADR would be zero if the Total Room Revenue is zero and Rooms Sold is greater than zero. This could happen if rooms were given away free to non-staff guests for some reason, though typically only revenue-generating rooms are included in "Rooms Sold". If Rooms Sold is zero, the calculation is undefined (division by zero), and the tool will show an error.
9. How is ADR different from RevPAR?
ADR measures the average revenue per *occupied* room. RevPAR (Revenue Per Available Room) measures the average revenue per *available* room (occupied or vacant). RevPAR is calculated as Total Room Revenue / Total Available Rooms, or alternatively as ADR * Occupancy Rate. RevPAR gives a better overall picture of revenue generation relative to the property's capacity.
10. How can a hotel increase its ADR?
Strategies include dynamic pricing based on demand, upselling higher-category rooms, minimizing discounts, implementing minimum stay requirements during peak times, and enhancing perceived value through service and amenities.
