The Average Daily Rate (ADR) is a key performance indicator in the hospitality industry that measures the average revenue earned per rented room. It helps in understanding the overall performance and profitability of a hotel.
Average Daily Rate (ADR):
\[ \text{ADR} = \frac{\text{Total Revenue}}{\text{Number of Rooms Sold}} \]
Estimated Average Daily Rate (Estimated ADR):
\[ \text{Estimated ADR} = \left( \frac{\text{Average Monthly Revenue}}{30} \right) \div \text{Number of Rooms in Property} \]
Example 1:
Let's assume that a hotel earns $2,558,000 in revenue from renting out 100 rooms in six months. If the total number of rooms rented in that period is 18,047 rooms, the ADR calculation goes as follows:
\[ \text{ADR} = \frac{2,558,000}{18,047} = 141.74 \]
ADR is $141.74 per room.
Example 2 (Estimated ADR):
If there is no record of the number of rooms sold in the same period, we can estimate ADR based on the number of rooms in the property as follows:
Average monthly revenue = $2,558,000 / 6 months = $426,333.33
\[ \text{Estimated ADR} = \left( \frac{426,333.33}{30} \right) \div 100 = 142 \]
Estimated ADR is $142 per room.