What is Average Daily Rate (ADR)?
Average Daily Rate (ADR) is a core hotel KPI that shows the average price you earned per occupied room over a period. It strips out empty rooms and looks only at what paying guests actually paid, so it is the cleanest read on your pricing power.
How to calculate ADR
ADR = Total Room Revenue / Total Rooms Sold.
Example: if you earned $24,000 in room revenue across 160 room-nights, your ADR is $24,000 / 160 = $150.00.
Use room revenue only, not total revenue. Leave out food and beverage, spa, parking, and other ancillary income, and exclude complimentary or house-use rooms from rooms sold.
Why ADR matters
- It is the price half of the revenue equation (the other half is occupancy).
- Rising ADR with steady occupancy means stronger pricing, not just more volume.
- It feeds RevPAR, the metric most owners watch.
How to improve ADR
- Use dynamic, demand-based pricing instead of flat seasonal rates.
- Upsell room upgrades and add-ons at booking and check-in.
- Shift demand toward higher-value room types and direct channels.