Average Daily Rate meaning in hospitality

Average Daily Rate (ADR) is a key metric in the hospitality industry that measures the average revenue per room per day. You calculate ADR by dividing total room revenue by number of rooms sold. This will tell you how much revenue you're making from each room occupied.

ADR is important for hospitality people because it affects your property's profitability. By tracking ADR you can check your pricing, compare to competitors and find opportunities to increase revenue. Higher ADR means you're getting more value from your rooms and more high-paying guests.

Let’s say you're the revenue manager of a 100-room hotel. Over the last month your hotel sold 2,500 room nights and made £250,000 in room revenue. To calculate your ADR you would divide £250,000 by 2,500, which gives you an ADR of £100. You might use this to adjust your pricing strategy, maybe by implementing dynamic pricing during peak periods or offering targeted promotions to increase occupancy during slow periods. By monitoring and optimising your ADR regularly you can work towards improving your hotel’s overall performance.'