Average Daily Room Rate (ADR)
What is ADR?
ADR is the average daily income per paid occupied room and is used to measure the operating performance of the hotel. ADR is one of the KPIs used by hotels. Other KPIs like Occupancy Rate are used in combination with ADR to result in revenue per available room (RevPar).
How to calculate ADR?
The average amount paid per room over the total rooms occupied over that period. Example Hotel the Grand has €20.000,- in room revenue and 200 rooms sold, the ADR would be €100,-
- ADR is a useful metric to measure the financial performance of a hotel and to develop an effective revenue management strategy
- Being able to implement different pricing strategies based on customers segmentation that directly influence your ADR
- ADR should only be used along with Occupancy Rate & RevPar and cannot be used as a standalone metric
“It’s all about total nett contribution in the company”
Oaky user story – Revenue Manager
“A certain segment is spending quite a lot of money. We thought this segment was doing extremely good because we had a contract with a high ADR. In other words: a high contract rate. However, when we look at the total of how much they are spending in house; it’s way less compared to another segment. Resulting in a lower total nett value of this customer compared to another so we should switch our focus to this customer. Yes, they do pay less in room revenue, but we see they spend more in the hotel. Where to focus our energy is the question? Because in the end it’s all about total nett contribution in the company.”