Average daily rate, or ADR, is a hotel performance metric that divides total room revenue by the number of rooms sold, measuring the average price a property earns per occupied room. ADR isolates pricing power from occupancy, which is why revenue managers use it to judge how much a hotel can charge without counting empty rooms.
How Is Average Daily Rate Calculated?
Average daily rate is calculated by dividing total room revenue by the number of rooms sold over a period. The formula is ADR = Room Revenue / Rooms Sold. It counts only occupied, revenue-generating rooms. Complimentary rooms, house-use rooms, and non-room revenue such as food, beverage, and parking are excluded, so ADR reflects room pricing alone rather than total guest spend.
Because ADR ignores unsold rooms, it answers a narrow question: when the hotel does sell a room, how much does it get for it. A resort can post a high ADR while half empty, and a budget property can post a low ADR while full. That is a feature, not a flaw, because ADR is meant to isolate rate so managers can pair it with occupancy for the fuller picture.
Component | Included in ADR | Excluded from ADR |
Room revenue | Yes, net of discounts | No |
Rooms sold | Denominator | Complimentary and house-use rooms |
Food and beverage | No | Yes |
Parking and ancillary | No | Yes |
According to CoStar and STR, full-year 2025 U.S. hotel ADR was $160.54, up 0.9 percent year over year, even as occupancy and RevPAR declined. New York City posted the highest full-year 2025 ADR among major markets at $333.71, more than double the national figure, illustrating how far ADR ranges by market and class.
Why Average Daily Rate Matters
Average daily rate matters because it is the cleanest read on a hotel's pricing power, stripped of the occupancy noise that clouds top-line revenue. A rising ADR signals that guests will pay more for the product, which supports higher valuations at a given occupancy. Asset managers track ADR to judge whether a hotel is under-pricing its rooms.
The operator-side risk is reading ADR alone. A high ADR achieved by turning away price-sensitive demand can leave rooms empty and revenue per available room low. ADR is diagnostic, not sufficient. It tells you the rate you achieved, not whether that rate filled the building, which is why it is always paired with occupancy and RevPAR.
Example
A 150-room hotel sells 3,600 room nights in a 30-day month, generating $612,000 in room revenue. ADR = Room Revenue / Rooms Sold isolates the rate.
Metric | Value | Calculation |
Room revenue | $612,000 | Given |
Rooms sold | 3,600 | Given |
ADR | $170.00 | $612,000 / 3,600 |
Available room nights | 4,500 | 150 rooms x 30 nights |
Occupancy | 80% | 3,600 / 4,500 |
RevPAR | $136.00 | $170.00 x 0.80 |
ADR is $170.00 per occupied room. Because the hotel filled only 80 percent of its rooms, RevPAR falls to $136.00 per available room. The $34 gap between ADR and RevPAR is the cost of the 20 percent of rooms that sat empty, a gap ADR alone would never reveal.
Variations and Edge Cases
Average daily rate is defined narrowly, so several adjacent metrics get confused with it. The table below separates ADR from the figures asset managers most often mistake for it.
Metric | What it measures |
ADR | Room revenue per occupied room |
RevPAR | Room revenue per available room |
ARR | Average room rate, a synonym for ADR |
TRevPAR | Total revenue per available room, including ancillary streams |
GOPPAR | Gross operating profit per available room, a profit metric |
The common mistake is treating ADR as total guest spend. ADR excludes food, beverage, and every ancillary line, so a hotel with strong non-room revenue can look weaker on ADR than its overall economics justify.
Average Daily Rate vs RevPAR
Average daily rate is often confused with RevPAR, and the two divide the same room revenue by different denominators. ADR divides room revenue by rooms sold, so it measures rate on occupied rooms only. RevPAR divides room revenue by rooms available, so it spreads revenue across the whole inventory. ADR isolates pricing; RevPAR blends pricing with occupancy.
The link is arithmetic: RevPAR = ADR x Occupancy, so RevPAR can never exceed ADR and equals it only at full occupancy. A hotel with a $200 ADR at 70 percent occupancy has a RevPAR of $140. Reading ADR without RevPAR hides how many rooms went unsold; reading RevPAR without ADR hides whether revenue came from rate or volume.
Frequently Asked Questions
How do you calculate average daily rate?Divide total room revenue by the number of rooms sold over the period. The formula is ADR = Room Revenue / Rooms Sold. A hotel earning $612,000 from 3,600 room nights has an ADR of $170. Only occupied, revenue-generating rooms count.
What is the difference between ADR and RevPAR?ADR divides room revenue by rooms sold, measuring rate on occupied rooms only. RevPAR divides room revenue by rooms available, blending rate with occupancy. RevPAR equals ADR x occupancy, so RevPAR is always at or below ADR.
Does ADR include food and beverage?No. Average daily rate counts room revenue only, net of discounts. Food, beverage, parking, and other ancillary revenue are excluded. Metrics like TRevPAR and GOPPAR capture those additional streams; ADR is deliberately limited to room pricing.
Related Terms
RevPAR
Physical Occupancy
Net Operating Income
Market Rent
Broker Analytics