ADR (Average Daily Rate)
The average nightly rate actually paid across the nights you sold — it says nothing about the nights you did not sell.
ADR = nightly room revenue ÷ nights booked
ADR answers one narrow question: when somebody booked, what did they pay per night? It divides the revenue you earned from nightly rates by the number of nights that were actually booked. Unsold nights are not in the denominator, which is exactly what makes ADR both useful and dangerous.
It is useful because it isolates price from volume. If your ADR rose 12% year over year, guests paid more per night, full stop — no occupancy effect is hiding inside it.
It is dangerous because it is trivially gamed by doing less business. Raise your rates until you sell only your four best summer weekends and your ADR will look magnificent. You will also have an empty calendar. ADR is a diagnostic, never a goal.
Most operators compute ADR on the nightly rate alone, excluding cleaning fees and taxes. That is the convention worth keeping, because cleaning fees are roughly fixed per stay and folding them in makes short stays look artificially expensive.
Where it goes wrong
Reporting ADR without occupancy beside it. The two move in opposite directions under almost every pricing change, so either number alone can be made to tell whatever story you want.
Related terms
- RevPAR (Revenue Per Available Rental) — Revenue divided by every night the property was available — the single number that cannot be improved by simply pricing yourself out of the market.
- Occupancy rate — The share of your available nights that sold — accurate only if 'available' genuinely means bookable.
- Length-of-stay discount — A reduction applied for longer bookings — worth it only when the nights it buys would genuinely not have sold separately.