ADR stands for Average Daily Rate. It is a key performance metric used in the hospitality industry to measure the average rate at which hotel rooms are sold over a specific period of time.
ADR is calculated by dividing the total room revenue by the total number of rooms sold during a given period, typically one day. The resulting figure represents the average rate per occupied room for that period.
For example, if a hotel has 100 rooms and generates $10,000 in room revenue in a given day, and 80 of those rooms are occupied, the ADR would be calculated as follows:
ADR = $10,000 รท 80 = $125
The ADR provides important insight into a hotel's pricing strategy and revenue management. It is used in conjunction with other metrics, such as occupancy rate and revenue per available room (RevPAR), to assess the overall performance of a hotel.
A higher ADR indicates that a hotel is generating more revenue per occupied room, which can help to increase profitability. However, setting prices too high can also lead to lower occupancy rates, which can negatively impact revenue. Therefore, it is important for hotel operators to strike a balance between ADR and occupancy rate to optimize revenue and profitability.
