ADR (Average Daily Rate)
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In short
ADR (Average Daily Rate) is the average price actually paid per occupied room over a given period. It equals total room revenue divided by the number of rooms sold (not available).
Formula
ADR = Total Room Revenue / Rooms Sold
Worked example
ADR (Average Daily Rate)
ADR isolates pricing from demand. Two hotels can have identical occupancy but very different ADR because of segment mix, channel mix, or pricing discipline. Hotels increase ADR through dynamic pricing, length-of-stay restrictions on peak nights, package bundling, and shifting bookings from OTAs (where commission depresses net rate) to direct channels. Watch out: chasing ADR alone can suppress occupancy; the right metric to optimise is RevPAR.
Why it matters
ADR drives gross margin per room more directly than occupancy because incremental room nights have low marginal cost. Most independent hotels can lift ADR by 5-10% in a quarter through better channel mix and stricter rate parity, without losing demand.
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Frequently asked questions
No. Complimentary rooms (comps), house-use rooms, and rooms blocked for staff are excluded from the rooms-sold count.
No. ADR is net room revenue divided by rooms sold. Including VAT, city tax, or resort fees inflates ADR artificially and breaks comparability with STR benchmarks.
Average rate usually refers to the rate of an individual reservation. ADR is the weighted average across all sold rooms in a period.
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Written by
Maciej Dudziak
Co-founder
.NET developer with 10+ years of experience building scalable back-end systems. Specializes in .NET, Azure, and modern databases.
Published: May 15, 2026