[ HOSPITALITY GLOSSARY · METRIC ]
What Is ADR in Hotels? (Average Daily Rate)
ADR, or Average Daily Rate, is the average revenue a hotel earns per occupied room per night. It's calculated by dividing total room revenue by the number of rooms sold.
ADR tells you how much guests are actually paying for a room, independent of how full the hotel is — one of the three core numbers in hotel revenue management.
How to calculate ADR
ADR = Room revenue ÷ Rooms sold
(OVER THE SAME TIME PERIOD)
Example: a hotel earns $12,000 in room revenue on a night it sells 80 rooms.
ADR = $12,000 ÷ 80 = $150
Note that ADR only counts occupied rooms — empty rooms don't drag it down. That's the key difference from RevPAR (below), which does account for empty rooms.
Why ADR matters
It isolates pricing power. ADR shows what guests will pay for your rooms, separate from occupancy. A rising ADR means you're commanding higher rates; a falling one may signal over-discounting.
It's a lever, not just a number. Revenue managers push ADR up through dynamic pricing, packaging, and segmentation — without simply chasing occupancy at any price.
It feeds RevPAR. ADR and occupancy multiply together into RevPAR, the industry's headline performance metric.
ADR vs RevPAR vs TRevPAR
| Metric | What it counts | Formula |
|---|---|---|
| ADR | Revenue per occupied room | Room revenue ÷ rooms sold |
| RevPAR | Revenue per available room (rate × occupancy) | Room revenue ÷ rooms available |
| TRevPAR | Total recognized hotel revenue per available room | Recognized hotel revenue ÷ available room-nights |
ADR answers “how much are we charging?” RevPAR answers “how well are we filling and pricing?” TRevPAR answers “how much recognized hotel revenue are we earning per available room?” It does not automatically include all destination guest spending or third-party marketplace GMV — see What Is TRevPAR?.
How to increase ADR
Dynamic pricing — raise rates when demand is strong instead of holding a static price.
Package instead of discount — a room-plus-experience bundle can support room pricing through added value. Only the revenue allocated to the room enters ADR, not the full package price.
Upsell room categories — move guests to higher-value rooms at booking or check-in.
Segment demand — set rates and offers for leisure, corporate, group, and other demand segments according to willingness to pay and booking patterns.
Use revenue management — review forecasts, booking pace, room-category mix, and rate restrictions to make informed pricing decisions.
Apply minimum-stay rules selectively — use them where demand supports protecting valuable dates, while monitoring rate, occupancy, and displacement rather than assuming every restriction raises ADR.
Pricing decisions should balance rate, occupancy, and the mix of rooms sold. When a hotel sells upsells and experiences and packages, it can support room pricing without a race to the bottom. Room-category upsells contribute to room revenue; non-room extras do not directly increase ADR.
How to improve net room revenue and profitability
Reducing OTA reliance can lower distribution costs, but does not directly increase ADR. At the same room price and number of rooms sold, ADR stays the same regardless of the booking channel. Lower commissions can improve net room revenue and profitability after accounting for the costs of acquiring and serving direct bookings.
Compare OTA commissions with direct marketing, booking-engine, payment-processing, and other channel costs. Direct bookings are not cost-free. Evaluate net room revenue and contribution by channel alongside ADR, occupancy, and RevPAR. See our guide to increasing direct bookings and reducing OTA dependence.
Frequently asked questions
- What does ADR mean in a hotel?
- ADR stands for Average Daily Rate — the average revenue a hotel earns per occupied room per night, calculated as room revenue divided by rooms sold. It measures pricing power independent of occupancy.
- How do you calculate ADR?
- Divide total room revenue by the number of rooms sold. For example, $12,000 in room revenue across 80 rooms sold gives an ADR of $150. Only occupied rooms are counted.
- Does reducing OTA dependence increase ADR?
- Not directly. ADR is room revenue divided by rooms sold. If room prices and rooms sold are unchanged, reducing OTA commissions does not change ADR. Lower distribution costs can improve net room revenue and profitability after accounting for direct-booking acquisition and operating costs.
- What is the difference between ADR and RevPAR?
- ADR is revenue per occupied room (room revenue ÷ rooms sold), so empty rooms don't affect it. RevPAR is revenue per available room (room revenue ÷ rooms available), so it reflects both rate and occupancy.
[ RELATED ]
[ GROW RATE WITHOUT THE RACE TO THE BOTTOM ]
Protect ADR by selling more than the room.
DestinationCommerce turns your hotel into a branded marketplace — experiences, packages, and local partners — so you grow revenue per guest without discounting the rate.