what is the average daily rate adr 
the average daily rate adr is a metric widely used in the hospitality industry to indicate the average revenue earned for an occupied room on a given day the average daily rate is one of the key performance indicators kpi of the industry another kpi metric is the occupancy rate which when combined with the adr comprises revenue per available room revpar all of which are used to measure the operating performance of a lodging unit such as a hotel or motel understanding the average daily rate adr the average daily rate adr shows how much revenue is made per room on average the higher the adr the better a rising adr suggests that a hotel is increasing the money it s making from renting out rooms to increase the adr hotels should look into ways to boost price per room hotel operators seek to increase adr by focusing on pricing strategies this includes upselling cross sale promotions and complimentary offers such as free shuttle service to the local airport the overall economy is a big factor in setting prices with hotels and motels seeking to adjust room rates to match current demand to determine the operating performance of a lodging the adr can be measured against a hotel s historical adr to look for trends such as seasonal impact or how certain promotions performed it can also be used as a measure of relative performance since the metric can be compared to other hotels that have similar characteristics such as size clientele and location this helps to accurately price room rentals calculating the average daily rate adr the average daily rate is calculated by taking the average revenue earned from rooms and dividing it by the number of rooms sold it excludes complimentary rooms and rooms occupied by staff average daily rate rooms revenue earned number of rooms sold text average daily rate frac text rooms revenue earned text number of rooms sold average daily rate number of rooms soldrooms revenue earned example of the average daily rate adr if a hotel has 50 000 in room revenue and 500 rooms sold the adr would be 100 50 000 500 rooms used for in house use such as those set aside for hotel employees and complimentary ones are excluded from the calculation real world exampleconsider marriott international mar a major publicly traded hotelier that reports adr along with occupancy rate and revpar for 2019 marriott s adr increased by 2 1 from 2018 to 202 75 in north america the occupancy rate was fairly static at 75 8 taking the adr and multiplying it by the occupancy rate yields the revpar in marriott s case 202 75 times 75 8 equates to a revpar of 153 68 which was up 2 19 from 2018 the difference between the average daily rate adr and revenue per available room revpar the average daily rate adr is needed to calculate the revenue per available room revpar the average daily rate tells a lodging company how much they make per room on average in a given day meanwhile revpar measures a lodging s ability to fill its available rooms at the average rate if the occupancy rate is not at 100 and the revpar is below the adr a hotel operator knows that it can probably reduce the average price per room to help increase occupancy limitations of using the average daily rate adr the adr does not tell the complete story about a hotel s revenue for instance it does not include the charges a lodging company may charge if a guest does not show up the figure also does not subtract items such as commissions and rebates offered to customers if there is a problem a property s adr may increase as a result of price increases however this provides limited information in isolation occupancy could have fallen leaving overall revenue lower 