Hotel ADR: Definition, Formula, and RevPAR Differences

Hotel ADR, short for Average Daily Rate, is the measure of average revenue earned per occupied room per day — a core metric that hoteliers use to gauge pricing effectiveness. Calculated by dividing total room revenue by the number of rooms actually sold, ADR strips away the effect of unsold inventory to reveal what guests are genuinely paying for the rooms they book (CoStar/STR). This guide explains the formula, its relationship to RevPAR, and how to avoid common misinterpretations, drawing on industry-standard sources.

Last checked: 2026-09-12

Full Name: Average Daily Rate · Industry: Hospitality / Lodging · Category: Key Performance Indicator (KPI) · Common Abbreviation: ADR

What does ADR mean in hotels?

ADR stands for Average Daily Rate, and in hotel operations it measures the average room revenue earned per occupied room over a specific period — typically a day, week, month, or year. The metric answers a straightforward question: of the rooms that actually had guests staying in them, how much revenue did each room generate on average?

The STR division of CoStar defines ADR as “the measure of the average paid for rooms sold in a given time period.” Alongside occupancy rate and RevPAR, it forms one of the three essential performance indicators that hoteliers, asset managers, and investors track to assess a property’s health.

What makes ADR distinct from other metrics is its denominator: it counts only rooms that were sold — occupied rooms — and completely ignores empty rooms. This means ADR is a pure pricing signal. As Hospitality Net explains, dividing revenue by total rooms available would produce RevPAR, not ADR — a distinction many newcomers to hotel finance get wrong.

How do I calculate the ADR for a hotel?

The calculation is deliberately simple. ADR equals total room revenue divided by the number of occupied rooms during the measured period. Investopedia and Corporate Finance Institute both present the same formula, and it is universally accepted across the hospitality industry.

ADR calculation formula

ADR = Total Room Revenue ÷ Number of Occupied Rooms

Only revenue that comes directly from room bookings counts. Ancillary charges such as room service, spa treatments, parking fees, and minibar purchases are excluded. Similarly, taxes are stripped out of the revenue figure before calculating ADR, as PriceLabs confirms. Complimentary rooms, staff stays, and rooms used for house purposes are also excluded from the occupied-room count.

Hotel ADR example

Consider a property that sells 60 rooms in a single day and generates 300,000 in total room revenue. According to the example provided by MMR Hotels, the ADR for that day would be 300,000 ÷ 60, or 5,000 per occupied room.

The figure works identically across longer periods. To calculate monthly ADR, sum the total room revenue for the month and divide by the total number of occupied rooms across all 30 or 31 days. Cloudbeds and other property-management system providers now offer ADR calculators that automate the process, but the underlying arithmetic has not changed.

Step-by-step calculation walkthrough

To calculate ADR by hand for any time period, follow these five steps:

1. Identify the period. Choose the day, week, month, or year you want to measure.
2. Sum total room revenue. Add up all revenue from paid room bookings in that period. Exclude taxes, fees, food, spa, parking, and any other non-room income.
3. Count occupied rooms. Count every room that was sold and occupied during the period. Exclude complimentary rooms, staff rooms, and house-use rooms.
4. Apply the formula. Divide total room revenue (step 2) by the number of occupied rooms (step 3).
5. Verify. Ensure the numerator and denominator cover the same period and that no unsold rooms were mistakenly included in the denominator.

Roam Hospitality notes that this method is standard across budget motels and luxury resorts alike — the formula scales regardless of property type.

What is the difference between ADR and RevPAR?

ADR and RevPAR (Revenue Per Available Room) are often discussed together, but they answer different questions and carry distinct trade-offs. Understanding the difference is essential for anyone interpreting hotel financial reports or managing revenue strategy.

Hotel ADR vs RevPAR

ADR focuses exclusively on sold rooms — it tells you the average rate guests actually paid. RevPAR, by contrast, spreads revenue across every room the hotel could have sold, whether it was occupied or not. As Conduit AI explains, ADR is a pricing-effectiveness metric, while RevPAR blends pricing and occupancy into a single efficiency figure.

The relationship between the two is governed by a simple identity: RevPAR = ADR × Occupancy Rate. Because occupancy can never exceed 100%, RevPAR will always be equal to or lower than ADR. If occupancy is 70%, RevPAR will be exactly 70% of ADR. Niska Group uses this relationship to illustrate a critical insight: a hotel can report a record ADR while its RevPAR declines — if occupancy is falling, the ADR gain may mask a drooping fill rate.

RevPAR formula in hotel

RevPAR is calculated as total room revenue divided by total rooms available, or equivalently as ADR multiplied by the occupancy percentage. AltexSoft presents both formulas as interchangeable and emphasizes that RevPAR is the preferred metric for benchmarking a property against its competitive set because it accounts for both rate and occupancy across the entire inventory.

ADR tells you the average rate you’re getting for the rooms you actually sell. RevPAR tells you how well you’re monetizing your entire room inventory — including empty ones.

— Canary Technologies

In practical terms, a revenue manager may use ADR to evaluate whether a discount promotion is eroding rate integrity, while an asset manager comparing two properties of different sizes and occupancy profiles would likely use RevPAR for a fairer comparison. HotelSync describes ADR as a core metric for rate-strategy diagnosis, noting that it strips away occupancy noise to reveal pricing trends.

Frequently asked questions about hotel ADR