ADR, the average daily rate, is the average price a hotel earned for each room it sold in a period. It answers one question: when we sold a room, what did we get for it?
Formula
ADR = room revenue ÷ room nights sold
Count room revenue only: the price of the rooms, without tax, breakfast, minibar or other extras. A room night is one room sold for one night, so a guest who stays three nights counts as three room nights.
Worked example
A 20-room guesthouse sells 450 room nights in a 30-day month and earns 45,000 in room revenue.
ADR = 45,000 ÷ 450 = 100
On average, each room sold that month brought in 100.
Rooms given away free (complimentary) or used by staff are usually left out of ADR, because they would pull the average down without saying anything about price. LobbyMind's reports count them as sold for occupancy but leave them out of ADR.
Why it matters to a small property
ADR tells you whether your prices hold up. If occupancy rises but ADR falls, you may be filling rooms with discounts. If ADR rises and occupancy falls, your prices may be turning guests away. Neither figure alone tells the full story, so read ADR together with occupancy rate and RevPAR, which combines the two.
ADR also helps you compare channels. Work it out for direct bookings and for each OTA after commission, and you see what each channel really pays.
To work out ADR, occupancy and RevPAR from your own figures, use the RevPAR calculator. In LobbyMind, the manager's flash report shows ADR for any day, and the prices behind it are set in rates and seasons.