What Is ADR in the Hotel Industry?

ADR is one of the first pieces of jargon every hotelier meets, and one of the most useful once it clicks. It stands for average daily rate — the average price you actually got for the rooms you sold. It answers a simple, important question: on the rooms that did sell, how much were you charging? Master this one number and you've taken the first real step into revenue management.

This is one of the three core metrics every independent hotel should be able to read. For how ADR sits alongside occupancy and RevPAR, start with our hub, ADR, occupancy and RevPAR explained. This page zooms in on ADR alone.

The definition

ADR is your room revenue divided by the number of rooms you sold, over whatever period you're looking at — a night, a week, a month. It deliberately ignores the rooms that stayed empty. That's its strength and its blind spot: ADR tells you about the value of a sold room, and nothing about how many you failed to sell.

A worked example

Say your hotel has 20 rooms. On a given night you sell 15 of them and take ₹90,000 in room revenue. Your ADR is:

• ₹90,000 room revenue ÷ 15 rooms sold = ₹6,000 ADR

Notice what ADR does not include: the five empty rooms. If you'd sold all 20 rooms for the same ₹90,000, your ADR would drop to ₹4,500 — even though you filled more rooms — because you spread the same money across more sold rooms at a lower price each. That's the crucial insight: a higher ADR isn't automatically better, and a lower one isn't automatically worse. It has to be read next to occupancy.

What ADR does — and doesn't — tell you

ADR is the clearest read on your pricing power: how much guests are willing to pay for a room at your hotel. Watch it climb and you're winning on rate; watch it fall and you're discounting, whether you meant to or not. But because it ignores empty rooms, a sky-high ADR can hide a half-empty hotel. This is exactly why you never steer by ADR alone — the number that combines rate and occupancy is RevPAR.

What counts as a “good” ADR?

There's no universal number, and anyone who quotes one as a benchmark is guessing — a good ADR for a beach resort in peak season and a budget hotel in the off-season are worlds apart. The only comparisons that matter are:

• Against your own history. Is this month's ADR higher than the same month last year?
• Against your local competitive set. Are you holding rate against similar hotels nearby, or leaving money on the table?
• Against occupancy. A rising ADR that doesn't crater your occupancy is the healthy kind.

How to raise it

Once you can read ADR, the natural next question is how to lift it without emptying the hotel — through smarter pricing, better room mix, and selling value rather than cutting rate. That's a topic in itself: see how to increase ADR. And the engine behind most ADR gains is letting price follow demand instead of defaulting to a fixed rate — the idea behind dynamic pricing.