Average daily rate (ADR) is a hotel performance metric: the average room revenue earned for each room sold in a period. You divide room revenue by the rooms sold, leaving out free and staff rooms. A vacation rental can read it per booked night. ADR shows price only, not how many rooms stayed empty.
Also called ADR.
You can meet ADR in a booking system report, a channel report or a monthly review of your results. It is not RevPAR, which divides the same room revenue by every room available, sold or not. Nor is it a published price: ADR is what you actually earned per room sold.
Key points
- ADR is room revenue divided by rooms sold, for one stated period.
- Published definitions draw the line in different places, for example on cleaning fees and on food, beverage and spa income, so write your own rules down once, on a definition card.
- Gross ADR hides what each sale cost you; net ADR per channel shows what each night left you.
- For tours and attractions, the idea has to be adapted, for example to average price per seat or ticket sold, not the room formula copied.
What is average daily rate?
ADR answers one question: on average, what did each room you sold bring in? Unsold rooms play no part in it. That is its strength and its limit.
Four nearby terms are easy to mix up with it:
- RevPAR: room revenue divided by rooms available, sold or not. Its own entry covers how to read it.
- Occupancy rate: rooms sold divided by rooms available. It counts nights sold, not money.
- Rack rate and best available rate: prices a hotel publishes or offers before any booking. ADR is what the bookings actually paid.
- Net ADR: on this page, ADR for one channel after that channel’s commission and promotion cost. It is not the same as a net rate, which has its own entry.
How average daily rate works in practice
The formulas
- ADR = [room revenue in the period] ÷ [rooms sold in the period]
- Net ADR for one channel = ([room revenue from that channel in the period] minus [commission and promotion cost of that channel in the same period]) ÷ [rooms sold through that channel in the period]
Count rooms sold night by night, so a stay of several nights counts once for each night, and take revenue and rooms sold from the same period.
This page builds net ADR the way our Tourism Revenue Advisor builds net RevPAR. Its rule: “Net RevPAR = (room revenue − identified acquisition costs) / available rooms; state exactly which costs were deducted.”
The ADR definition card
Fill this in once, before your first calculation. Then every month, season and channel is measured on the same basis. Keep it with your reports.
| Line | What to write |
|---|---|
| 1. Room revenue | Nightly room rate: in. Then mark each of these in or out: cleaning fees, breakfast inside a package, taxes, service charges. |
| 2. Rooms sold | Room nights sold in the same period as line 1. Complimentary rooms and house use rooms: out. |
| 3. ADR by channel | Gross ADR and net ADR for each channel: direct, each online travel agency, any other. Name the costs net ADR takes out, such as commission and promotion cost. |
| 4. Tours and attractions | Average price per seat or ticket sold, with its own revenue and capacity rules. Not the room formula. |
Why line 1 needs a decision
Line 1 needs a decision because published definitions draw the line in different places:
- Lighthouse, a hospitality commercial platform, leaves food, beverage and spa income out of ADR. It says taxes and service charges are normally excluded and tells you to check your own reporting rules.
- AirDNA, a short-term rental data company, includes cleaning fees in its market ADR.
Neither choice is wrong. Mixing them is. A month counted with cleaning fees cannot be compared with a month counted without them.
Why lines 3 and 4 exist
Compare channels after their stated acquisition costs. Our Resorts Specialist includes net ADR in its channel comparisons. For tours and attractions, define the revenue and units separately: our Tourism Revenue Advisor warns against transferring room formulas unchanged.
An illustrative example (not a real business)
A small coastal guest house fills in its card before reviewing the month:
| Line | The guest house’s card |
|---|---|
| 1. Room revenue | Nightly rate: in. Cleaning fee: out. Local tax: out. Breakfast: out, because it is sold separately. Service charges: out. |
| 2. Rooms sold | Room nights sold in the same month. The room given free to a visiting supplier: out. |
| 3. ADR by channel | Direct nights and online travel agency nights: almost the same gross ADR. Neither channel incurred promotion costs in this example. After commission, net ADR is lower for the agency nights. |
| 4. Tours and attractions | Not used: no seats or tickets sold. |
The decision. No discount. The owner keeps the rate and puts the direct-booking link in every confirmation message. Next month’s review uses the same card, so the two months compare fairly.
Why average daily rate matters for hotels and guest houses
A higher ADR can accompany falling room revenue if fewer room nights sell. It also excludes acquisition costs. Before changing rates, check occupancy and net ADR by channel, using the same definition card for each comparison.
How to get started with average daily rate
- Fill in the definition card. Lines 1 to 3 before your first calculation; line 4 if you sell seats or tickets.
- Pull two figures per period. Room revenue and rooms sold, under the card’s rules.
- Split by channel. Work out gross and net ADR for each channel, and name the costs you took out.
- Compare like with like. Same card, same kind of period, same season last year where you have it.
- Read it next to occupancy. Then look at RevPAR, which combines the two.
How we help. The Tourism Revenue Advisor defines ADR, occupancy and RevPAR “with period and denominator” and compares channel economics with you. The Tourism Accountant reconciles ADR and occupancy to RevPAR. The Resorts Specialist compares channels by net ADR. The Hotel Management Expert builds financial comparisons that show ADR, occupancy, net revenue, cost and contribution with assumptions.
Apply it with your AI assistant. Copy this into the assistant you already use:
I'm reading this page about average daily rate (ADR): https://traveltech.digital/glossary/average-daily-rate/ Can you help me see how it applies to my work, and what I could do first? Use what you already know about me. If something important is missing, ask me instead of guessing.
Put AI to work in your tourism business
Frequently asked questions
What is ADR in hospitality?
ADR, or average daily rate, is the average room revenue a hotel, guest house or vacation rental earns for each room sold in a period. It is a price measure. It tells you what guests paid on average for a night, not how full you were.
Because unsold rooms are left out of the count, read ADR next to occupancy. A vacation rental can read the same idea per booked night.
How do you calculate ADR?
Divide room revenue for a period by the rooms sold in the same period: ADR = [room revenue in the period] ÷ [rooms sold in the period].
Count rooms sold night by night, so a stay of several nights counts once for each night. Leave complimentary and house use rooms out. Before the first calculation, decide which fees and taxes count as room revenue, and keep that rule for every period you compare.
What's included in and excluded from ADR?
It depends on the definition you follow, which is why the card above asks you to mark each item. Lighthouse leaves food, beverage and spa income out and says taxes and service charges are normally excluded. AirDNA includes cleaning fees in its market ADR.
Our advice: leave complimentary and house use rooms out of rooms sold, write your revenue rule down once, and apply it to every period and channel.
How does ADR differ from RevPAR?
ADR divides room revenue by rooms sold. RevPAR divides the same revenue by rooms available, sold or not. So ADR shows the average price guests paid, while RevPAR shows how well all your rooms earned, empty nights included.
ADR can rise while RevPAR falls, when a higher rate leaves more rooms empty. For how to read a change in RevPAR, see the RevPAR entry.
What are the limitations of ADR?
ADR shows price only. It ignores the rooms you did not sell, so it can climb while room revenue falls. It counts room revenue, not costs or profit.
Gross ADR also hides what each sale cost you. A night from a high-commission channel and a direct night can show the same rate and leave you different amounts. Read ADR next to occupancy, and split it by channel as net ADR.
Sources
- Lighthouse, guide to hotel ADR, checked 2026-10-19.
- AirDNA, glossary entry on average daily rate, checked 2026-10-19.
