Quick answer
ADR (Average Daily Rate) is the average revenue per room actually sold over a given period. The formula is simple: room revenue ÷ rooms sold. If on a given night you take in 7,000 € selling 70 rooms, your ADR is 100 €. It tells you the average price at which you're placing rooms, but on its own it isn't enough: always read it alongside occupancy and RevPAR to know whether the hotel is genuinely performing.
What ADR means
ADR stands for Average Daily Rate, sometimes called the average room rate. It measures one precise thing: how much you take in, on average, for each room you sell.
The key word is sold. Unlike RevPAR, ADR completely ignores rooms that stayed empty. If you sell a single room at 300 € in a 100-room hotel, your ADR that night is 300 €: very high, yet totally disconnected from the fact that 99 rooms sat empty.
So ADR answers one blunt question: at what average price am I selling the rooms I manage to sell? Nothing more, nothing less.
The ADR formula
There's just one base formula:
ADR = total room revenue ÷ number of rooms sold
Watch two details that make all the difference:
- Room revenue only. Exclude restaurant, bar, spa, parking, late check-out and any extra. Include them and you're measuring something else (TRevPAR), not ADR.
- Paid rooms only. Comps, free upgrades and house-use rooms belong in neither the numerator nor the denominator.
Worked example
A 100-room hotel sells 70 rooms on one night and takes in 7,000 € of room-only revenue.
ADR = 7,000 ÷ 70 = 100 €
The same over a month: if in June you sold 1,800 room-nights for 198,000 € of room revenue, the monthly ADR is 198,000 ÷ 1,800 = 110 €.
To run ADR together with occupancy and RevPAR from revenue and rooms, use the RevPAR and ADR calculator.
ADR, occupancy and RevPAR: how they talk to each other
ADR doesn't live alone. It's part of a trio of KPIs that together describe revenue health.
| KPI | What it measures | Formula | |---|---|---| | ADR | Average revenue per sold room | room revenue ÷ rooms sold | | Occupancy | % of rooms sold out of total available | rooms sold ÷ available rooms | | RevPAR | Average revenue per available room | ADR × occupancy |
The crux is that ADR and occupancy pull in opposite directions. To lift occupancy you usually drop rates (and ADR falls); to lift ADR you raise rates (and you risk losing occupancy). RevPAR is the referee that says which combination produces more total revenue.
Two scenarios
- Scenario A: ADR 120 €, occupancy 65% → RevPAR = 78 €
- Scenario B: ADR 95 €, occupancy 88% → RevPAR = 83.60 €
Scenario B has a lower ADR but a higher RevPAR. It means that, in this case, selling for less but filling more generates more revenue per available room. This is the classic case where looking at ADR alone would lead you astray.
What counts as a "good" ADR
There's no universal number. A boutique hotel in Venice in peak season and a 3-star on the outskirts in November live on completely different scales. ADR is always judged against three references:
- History — ADR for the same period last year. Seasonality is huge: compare August with August, not August with March.
- Budget — the average rate you set out to achieve at the start of the year.
- Comp set — comparable competing hotels. The ARI (Average Rate Index) measures precisely your average rate against the market.
ADR rising year over year at equal occupancy is an excellent sign: you're commanding better prices without losing guests. The absolute value, on its own, says little.
Concrete levers to raise ADR
Raising ADR without wrecking occupancy is the heart of revenue management. Here are the levers that actually work.
- Dynamic pricing: adjust rates in real time to demand, day of week, seasonality and city events. It's the number-one tool for pushing ADR during demand peaks.
- Segmentation and fencing: different rates for business and leisure, with rules (advance booking, non-refundability) that stop the guest willing to pay more from accessing the discounted rate.
- Upselling and cross-selling: superior rooms, a view, a high floor, late check-out. Every upgrade sold lifts ADR without occupying extra rooms.
- Pushing the direct channel: every booking from your own site instead of an OTA saves you 15-25% in commission, improving net ADR even at the same headline rate.
- Restrictions during peaks: minimum stays on weekends and during events, protecting high-demand nights from low-value single bookings.
To set the selling rate starting from cost per room, including OTA commissions and expected margin, use the room rate calculator.
Common mistakes
Even seasoned operators slip on these. They're worth keeping in mind.
- Including extras in revenue. Putting restaurant, spa and parking into the numerator inflates ADR and makes it incomparable with market benchmarks. ADR = room revenue only.
- Counting comp rooms. Adding free upgrades and house use to the denominator artificially lowers ADR. Zero-rate rooms are excluded.
- Reading ADR without occupancy. A record ADR with the hotel half empty is no success: RevPAR exposes it immediately.
- Comparing different periods. Pitting August's ADR against February's tells you nothing. Only equal-seasonality comparisons hold.
- Chasing high ADR at any cost. Keeping rates sky-high out of pride, leaving empty rooms that will never come back, destroys RevPAR. Tonight's unsold room is revenue lost forever.
Related resources
- RevPAR and ADR calculator — ADR, occupancy and RevPAR at once
- Room rate calculator — cost-plus pricing with OTA commissions and expected margin