Understand ADR (Average Daily Rate), a key hotel performance metric, and its importance for revenue management.
ADR, or Average Daily Rate, is a key performance indicator (KPI) in the hospitality industry that measures the average rental income earned from an occupied room per day. It is calculated by dividing the total room revenue by the total number of rooms sold.
For hotels, ADR is a critical metric for evaluating pricing strategies and overall revenue management effectiveness. A hotel aiming to increase its ADR might focus on upselling premium rooms or packages, or implement dynamic pricing based on demand, thereby maximizing the revenue generated from each guest stay. For example, a hotel could offer a "Romance Package" with a higher room rate that includes amenities like champagne and late checkout to boost its ADR.
