How this instrument works
Average daily rate is the average price a hotel actually collected per room sold in a period — total room revenue divided by the number of room-nights sold, not the number of rooms available. A revenue manager watches it daily alongside occupancy, because the two numbers answer different questions: occupancy says how full the property is, ADR says how much each filled room was worth. Cutting the price to chase a higher occupancy percentage can still leave revenue flat or falling if the rate gives back more than occupancy gains.
The formula excludes unsold rooms on purpose. A property with 200 rooms that sells only 120 of them still reports its rate from those 120 room-nights alone — the 80 empty rooms never enter the arithmetic. That is what separates this figure from RevPAR (revenue per available room), which divides the same room revenue by every room the property has, sold or not, and so falls whenever occupancy falls even if nobody's price moved. A revenue manager reads both together: this metric shows what guests paid, RevPAR shows what the building earned.
The average also blends every rate plan into one number — a $400 suite and a $90 discount room average into the same figure as two rooms at $245, so a shift toward premium rooms, or a run of heavily discounted nights, moves the figure without any single guest's price changing. Segmented reporting, split by room type or booking channel, catches what the property-wide average hides.
- Enter the period's total room revenue in Room revenue, $ — cash collected from rooms sold, before parking, minibar or other folio charges.
- Enter Rooms sold — the count of room-nights actually occupied and paid for in that same period, not the hotel's total room count.
- Read Average daily rate in the readout — that is room revenue divided by rooms sold, to the cent.
- Recalculate for a different date range, room type or channel to see how the rate shifts when the mix of what sold changes.
Worked example — 300 rooms at $45,000
A property books $45,000 in room revenue and sells 300 rooms over the period — a mid-size hotel running near full occupancy for a week, or a smaller property across a full month. Dividing $45,000 by 300 gives an average daily rate of $150: every room sold, averaged across every rate plan and every night, worked out to $150 per room-night.
That $150 figure says nothing about how many rooms sat empty. A 50-room hotel selling all 300 of those room-nights across six nights is fully booked, while a 400-room property selling the same 300 room-nights across the same six nights is running under 13% occupancy — same rate, very different business. Pair this reading with occupancy or RevPAR before judging whether $150 is strong or weak for the property.
Questions
What is a good average daily rate for a hotel?
There is no single good ADR — it depends on the market, star rating and season; a roadside motel and a downtown convention hotel can both be healthy businesses at wildly different rates. Compare your figure against your own history and against comparable properties in the same market and segment, not against a universal benchmark.
How is ADR different from RevPAR?
ADR divides room revenue by rooms sold; RevPAR divides the same room revenue by total rooms available, sold or not. ADR moves only with pricing and rate mix, while RevPAR also falls whenever occupancy falls, even if no rate changed. A property can hold ADR steady while RevPAR erodes if fewer rooms are selling.
Does ADR include taxes, fees or food and beverage revenue?
No — it is built from room revenue alone, net of taxes and any folio charges for parking, minibar, spa or dining. Mixing those in would make the figure track total guest spending rather than the price of the room itself, which is what this metric is designed to isolate.
Why would ADR rise while occupancy falls?
Usually a deliberate pricing choice: fewer, higher-paying bookings are being accepted instead of filling every room at a discount. Revenue management sometimes takes this trade when it protects total revenue or preserves rate positioning for a busier period ahead — reading ADR and occupancy together shows whether the trade paid off.
Should complimentary rooms count as rooms sold?
Most revenue-management systems exclude fully comped rooms from both room revenue and rooms sold, since a $0 rate would drag the average down without reflecting any pricing decision. Heavily discounted rooms are usually still counted, at whatever rate was actually charged, because that price was a real decision.
Can this rate be calculated for a single day?
Yes — divide that day's room revenue by the rooms sold that same day. A single day's figure is noisier than a weekly or monthly one because a handful of high- or low-rate bookings can swing it, so most revenue managers watch a rolling average alongside the daily number.
References
- U.S. Census Bureau — Quarterly Services Survey, Accommodation revenue
- U.S. Bureau of Economic Analysis — Travel and Tourism Satellite Account
Read this first: This instrument shows arithmetic, not advice. Real offers add fees, taxes and terms that vary by lender and place — verify the figures against your actual paperwork before deciding anything.