Average Daily Rate (commonly referred to as ADR) is a statistical unit that are often used in the lodging
industry. The number represents the average rental income per paid
occupied room in a given time period. ADR along with the property's
occupancy are the foundations for the property's financial performance.
ADR is one of the commonly used financial indicators in hotel
industry to measure how well a hotel performs compared to its
competitors and itself (year over year). It is common in the hotel
industry for the ADR to gradually increase year over year bringing in
more revenue. However, ADR itself is not enough to measure the
performance of the hotel. One should combine ADR, occupancy and RevPAR
(revenue per available room) to make a sound judgment on hotel
performance. Recently, some hotels have adopted a new concept called BAR
[best available rate] in addition to ADR.
Average Daily Rate formula is rooms revenue earned divided by number
of rooms that earned revenue. House use and complimentary rooms are
excluded from the denominators. 'House Use' rooms or those occupied by
hotel employees or management are excluded as they are not available for
sale and not generating income. Complimentary rooms are excluded since
they don't have an easy to calculate sale value.
