ADR (ADR)
In hotel revenue management, ADR (average daily rate) is the average price actually achieved per room sold, calculated as room revenue divided by rooms sold.
It is the rate you got, not the rate you published. The gap between those two is where most of the interesting questions live.
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What is ADR in hotels?
ADR answers one question: across everything you sold, what was the average price? Total room revenue divided by the number of rooms sold. Unsold rooms are excluded entirely, which is the single most important thing to understand about it.
That exclusion is what separates ADR from RevPAR. RevPAR divides by every room you had available. ADR divides only by the rooms that went. A hotel that sells four rooms at a high rate and leaves thirty-six empty has an excellent ADR and a terrible business.
ADR is normally quoted net of tax and excluding non-room revenue. Parking, breakfast charged separately, spa treatments and resort fees do not belong in the numerator unless you are deliberately calculating a package-inclusive figure, and if you are, say so, because nobody else will assume it.
Two other exclusions catch people out. Complimentary rooms and house-use rooms are sold at zero, so including them drags ADR down for no reason. Most property management systems exclude them by default, but it is worth confirming which convention yours uses before you compare your number to anyone else's.
The figure is usually reported daily, then aggregated to a month or a year by dividing total revenue by total rooms sold across the period. Do not average the daily ADRs. That weights a quiet Tuesday the same as a sold-out Saturday and produces a number that describes nothing.
Resources: RevPAR · Occupancy rate · Rate calendar
How ADR works in practice
The formula is room revenue divided by rooms sold. The interpretation is where it gets useful.
Worked example. A 46-room inn sells 31 rooms on a Saturday for $6,014 of room revenue. ADR is $194. The same property sells 12 rooms the following Tuesday for $1,908, an ADR of $159. The Saturday rate is 22 percent higher, which is the property doing its job: charging more when demand is there.
Read month to month and the number gets more revealing. If November ADR is up 6 percent on last year but occupancy is down 9 points, you have not won. You have priced yourself out of the volume and kept a flattering average. If ADR is flat while occupancy climbs, you are probably leaving rate on the table, because demand grew and price did not follow.
The most common trap is reading ADR without segment mix. A month where a corporate account sends forty room nights at a negotiated rate will show a lower ADR than the month before, and nothing about your pricing changed. The mix moved. Before you act on an ADR shift, check whether the business you sold is the same business you sold last time.
Resources: Booking pace · Dynamic pricing
Why ADR matters for independent hotels
An extra pound or dollar of ADR falls almost entirely to the bottom line. Selling one more room costs you cleaning, laundry, amenities and the card fee. Selling the same room for more costs you nothing.
That asymmetry is why rate is the more valuable lever for a small property, and it is the opposite of how most independents run. The instinct when a date looks soft is to drop the price and chase occupancy, because an empty room feels like a visible failure in a way that an underpriced full room does not. But a 40-room hotel running at 70 percent occupancy that lifts ADR by $10 earns roughly $102,000 more a year, with no extra rooms to clean.
The catch is that ADR alone will let you congratulate yourself while losing money. That is what RevPAR exists to prevent, and why neither number should be read on its own.
Resources: Revenue management for independent hotels
How to use ADR at your property
- Pull it by day, not by month. A monthly ADR hides the weekend and midweek patterns that decide what to change.
- Split it by segment. Transient, corporate, OTA and direct will have materially different ADRs. The blend tells you less than the parts.
- Compare like with like. November against November. A date against the same weekday. Never against a calendar month with a different shape.
- Read it beside occupancy, always. One of them moving on its own is a question, not an answer. Both together is a story.
- Watch achieved against recommended. If your achieved ADR sits consistently below the rate you published, something downstream is discounting: a channel, a rate plan, or a front desk matching prices on the phone.
- Track it net of channel cost too. A $190 OTA booking at 18 percent commission nets less than a $170 direct one.
What ADR will not tell you
It says nothing about how full you are. A property can post its best ADR of the year in its worst week, because the only guests who booked were the ones who would pay anything.
It says nothing about profit. ADR is a revenue measure with no view of what the business cost to acquire. A record ADR built on OTA bookings at 20 percent commission can be worth less than a lower one built on direct.
And it is easily distorted at small room counts. At 25 rooms, one unusual booking moves the daily average by several percent. Read the trend across a week or a month before you treat a single day's ADR as a signal.
How ampliphi approaches ADR
Ampliphi's everyday rate suggestion is demand-based, built on booking pace and occupancy, and it covers the base rate plus the differential between your room types. That differential is the part most tools leave to the operator, and it is where a lot of achievable ADR quietly goes missing at independent properties.
Competitive insight is a separate view. You choose up to five competitors to watch, and it does not feed the everyday demand-based suggestion. Keeping those apart is deliberate: a comp set tells you what the market is charging, not what your demand will bear.
You approve every rate before it publishes. Auto-publish is available once you trust the suggestions and it stays optional. Ampliphi runs on top of the PMS you already use.
Key takeaways: ADR
- ADR is room revenue divided by rooms sold. Unsold rooms are excluded, which is what makes it different from RevPAR.
- Aggregate by dividing totals, never by averaging daily ADRs.
- A rate increase is worth more than an occupancy increase, because it costs nothing to deliver.
- Always read it beside occupancy. Alone it can flatter a bad month.
- Check segment mix before acting on a change. The blend often moves when pricing did not.
- At small room counts, a single booking distorts a day. Read the trend.
Frequently asked questions about ADR
What is a good ADR for a small independent hotel?
There is no useful absolute number, and anyone quoting one is selling something. ADR is set by market, location, season, star rating and room product. A 30-room coastal guesthouse in shoulder season and a 30-room city centre boutique on a conference night have no meaningful common benchmark.
The question worth asking instead is whether your ADR is appropriate relative to your competitive set. That is what the average rate index measures: your ADR divided by the comp set's. Above 1.0 means you are achieving more than your share of the market's rate.
Even that has limits. If your comp set is badly chosen, ARI tells you that you beat the wrong hotels. Start by making sure the five properties you are comparing against are ones a guest would genuinely consider instead of you.
Should I chase ADR or occupancy?
Usually ADR, because it costs nothing to deliver. An extra room sold carries housekeeping, laundry, amenities and payment fees. An extra $10 on a room already being sold carries none of those. For most independents the flow-through on rate is close to total and the flow-through on occupancy is materially lower.
The exception is a genuinely soft date with no realistic prospect of filling at your current rate. There, occupancy is worth buying, but buy it late and with a fence, not by dropping the headline rate weeks out where you also discount the guests who would have paid full price.
The honest answer is that the question is usually wrong. RevPAR combines both, and it is the number that settles which of two months was actually better.
Why is my ADR down when I have not changed my rates?
Almost always segment or channel mix. A corporate account that sent more room nights than usual at a negotiated rate, a promotional OTA rate that ran longer than intended, or a run of longer stays that qualified for a length-of-stay discount will all pull the average down without a single published rate changing.
The second common cause is discounting at the point of sale. If your front desk matches a rate a guest quotes from a comparison site, that shows up in ADR and nowhere else. It is worth asking whether it is happening and how often.
Check the mix first. If mix explains it, the fix is the channel or the rate plan, not the headline rate.
Does ADR include taxes, resort fees or breakfast?
Conventionally, no. ADR is normally net of tax and covers the room only. Resort fees, breakfast charged separately, parking and any other ancillary revenue sit outside it and belong in total revenue measures instead.
The exception is a package rate, where the room and the extras are sold as one price. There you either allocate a room component and count that, or you calculate a package-inclusive ADR and label it clearly. What you cannot do is mix the two conventions in one report and compare the result to last year.
If you benchmark against a market report, check which convention it uses before concluding you are ahead or behind. A large share of apparent ADR gaps are definitional rather than real.
How do I calculate ADR across a month or a year?
Divide total room revenue for the period by total rooms sold in the period. One division, using totals.
Do not average the daily ADR figures. That gives every day equal weight, so a Tuesday with six rooms sold counts as much as a Saturday with forty. The result overstates quiet periods and understates busy ones, and the error grows with how variable your demand is, which for a seasonal independent is a lot.
The same rule applies to averaging across properties in a small group. Sum the revenue, sum the rooms sold, then divide.
Related terms
RevPAR
Room revenue divided by rooms available, whether or not they sold. Where ADR measures the price you achieved, RevPAR measures how well you converted the whole building into revenue. RevPAR is the number that settles whether a rate rise was worth the occupancy it cost.
Occupancy rate
The percentage of available rooms sold. The third of the three core metrics, and the one that gives ADR its context. ADR and occupancy pull against each other, which is why reading either alone is how people talk themselves into bad decisions.
RGI
Revenue Generation Index: your RevPAR divided by your competitive set's. It converts an absolute number into a share-of-market question, which is usually the more useful frame for a property whose rates are set by a local market rather than a national one.
Comp set
The small group of properties you genuinely compete with for the same guest. Your ADR only means something relative to theirs, which is why the composition of that list matters more than most operators think.
Booking pace
How fast reservations are accumulating for a future date against the same point last year. Where ADR reports what already happened, pace tells you what is about to, which is the only one of the two you can still act on.