Average daily rate
Average Daily Rate (commonly referred to as ADR) is a statistical unit that are often used in the lodging industry. The number represents the average rental income per paid occupied room in a given time period. ADR along with the property's occupancy are the foundations for the property's financial performance.
ADR is one of the commonly used financial indicators in hotel industry to measure how well a hotel performs compared to its competitors and itself (year over year). It is common in the hotel industry for the ADR to gradually increase year over year bringing in more revenue. However, ADR itself is not enough to measure the performance of the hotel. One should combine ADR, occupancy and RevPAR (revenue per available room) to make a sound judgment on hotel performance.
Average Daily Rate formula is rooms revenue earned divided by number of rooms that earned revenue. House use and complimentary rooms are excluded from the denominators. 'House Use' rooms or those occupied by hotel employees or management are excluded as they are not available for sale and not generating income. Complimentary rooms are excluded since they don't have an easy to calculate sale value.
- Reid, Robert (2009). Hospitality Marketing Management, 5th Edition. Wiley and Sons. pp. 305–306.