Average daily rate (ADR): how to calculate it and optimize pricing

Average daily rate (ADR) is one of the most important numbers in hotel revenue management. It tells you, on average, how much you earn per sold room in a given period. But ADR can also mislead: you can raise ADR and still lose revenue if occupancy drops, distribution costs rise, or guest satisfaction suffers.

This guide explains what average daily rate is, how to calculate it correctly, how it connects to occupancy and RevPAR, and the best strategies to optimize ADR sustainably.

Average daily rate: what it is and how to calculate it

Average daily rate (ADR) measures the average room revenue you earn per paid room sold.

The standard ADR formula

Average daily rate (ADR) = Room Revenue ÷ Rooms Sold

To keep ADR accurate, many hotel finance and revenue teams exclude complimentary rooms and staff rooms from “rooms sold” and focus on paid room nights.

ADR calculation example

• Room revenue (one day): €18,000
• Rooms sold (paid): 120

ADR = €18,000 ÷ 120 = €150

What ADR includes (and what it doesn’t)

ADR typically includes:

• Room-only revenue (base rate, sometimes plus packaged room portion depending on your accounting rules)

ADR typically does not include:

• F&B, spa, parking, late checkout fees (these belong to total revenue metrics like TrevPAR/RevPOR in many KPI frameworks)
• Distribution costs (OTA commissions, payment fees) unless you calculate a “net ADR” internally
• The operational cost of service delivery

This is why ADR is best treated as a pricing signal, not a full profitability metric.

Average daily rate vs occupancy vs RevPAR

Hoteliers should never optimize ADR in isolation. Pair it with:

• Occupancy rate: (Rooms Sold ÷ Rooms Available) × 100
• RevPAR: Room Revenue ÷ Rooms Available or ADR × Occupancy

A quick reality check

If ADR rises from €140 to €155 but occupancy falls sharply, your total room revenue may drop. RevPAR helps you see that immediately because it accounts for both rate and volume.

What is a “good” average daily rate?

A “good” ADR depends on:

• Market positioning (economy vs lifestyle vs luxury)
• Seasonality and demand drivers (events, business travel, flight capacity)
• Competitive set pricing and brand strength
• Room mix (suites vs standard, family rooms, accessible rooms)
• Distribution mix (direct share vs OTA share)

Instead of chasing a generic benchmark, define your own:

• ADR by month (seasonality baseline)
• ADR by day of week (weekend vs midweek patterns)
• ADR by segment (leisure, corporate, groups)
• ADR by channel (direct vs OTA vs wholesalers)

How to optimize average daily rate: strategies that actually work

Below are proven methods to increase ADR without triggering the common side effects: lower occupancy, worse reviews, and higher acquisition costs.

Average daily rate optimization tactics for hoteliers

1) Build a strong BAR ladder (rate architecture)

A structured Best Available Rate (BAR) ladder prevents “random pricing” and makes demand-based decisions easier:

• Define 5–10 BAR levels with clear triggers (occupancy, pace, local events, pickup speed)
• Avoid frequent deep discounts that train guests to wait for deals
• Use step-up pricing as you approach compression

Result: ADR increases gradually with demand, not through last-minute spikes that hurt conversion.

2) Use fences instead of broad discounts

If you need to stimulate demand, protect ADR integrity:

• Member-only rates (email list, loyalty sign-up)
• Mobile-only offers
• Advance purchase (non-refundable) with small discounts
• Value-add packages (breakfast, parking, late checkout) instead of lower public rates

Result: You fill rooms while keeping your visible price position strong.

3) Improve room-type upsell performance

ADR is heavily influenced by room mix. The fastest “clean” ADR win is selling a better room to the same guest.

• Bundle premium features clearly (balcony, view, larger size)
• Offer paid upgrades pre-arrival, not only at the desk
• Train staff to present upgrades as benefits, not apologies

Chekin angle: Chekin helps you offer upsells during online check-in, so upgrades happen earlier and more consistently—without adding front-desk pressure.

4) Reduce OTA dependence and increase net ADR

Gross ADR can look fine while profit shrinks due to commissions.

• Strengthen direct booking value: flexible policies, perks, add-ons, member rates
• Optimize your website conversion (clarity, trust signals, reviews, FAQs)
• Track net ADR by channel (ADR minus commissions/fees) to see what really performs

Result: You can raise “effective ADR” even if your displayed ADR stays stable.

5) Set smarter minimum-stay and arrival rules on peak dates

On compression nights, ADR improves when you reduce one-night gaps and increase average length of stay:

• Minimum stay rules for events and high-demand weekends
• Closed-to-arrival on dates that create unfillable gaps
• Shoulder-night incentives to extend stays

Result: Higher ADR and higher occupancy quality (less churn, fewer cleanings per revenue).

6) Protect reviews and experience while raising ADR

Raising ADR raises expectations. If experience lags, reviews drop—and future ADR becomes harder to defend.
Focus on “ADR-proofing” your operation:

• Faster, smoother arrivals (reduce queues, confusion, and key issues)
• Clear pre-arrival communication (parking, check-in time, access instructions)
• Consistent service recovery (issues handled fast, documented, followed up)

Chekin angle: Online check-in, automated messaging, and smart access workflows help keep arrivals smooth and consistent, which protects ratings as you push rate.

7) Track ADR with the right breakdowns (so you don’t fool yourself)

Your headline ADR can rise for the “wrong” reasons. Track:

• ADR by segment (corporate vs leisure vs groups)
• ADR by channel (direct, OTA, wholesale)
• ADR by room type (standard vs premium categories)
• ADR by lead time (last-minute vs advance)
• ADR vs cancellation/no-show patterns

This makes it easier to identify if ADR growth is driven by healthier demand—or by risky mix shifts.

Common ADR mistakes (and how to avoid them)

Mistake 1: Raising ADR and ignoring occupancy

Fix: monitor RevPAR and pickup pace daily/weekly. If conversion drops, adjust with fenced offers or packages.

Mistake 2: Discounting publicly to chase occupancy

Fix: stimulate demand with value-add and targeted offers, not blanket rate cuts.

Mistake 3: Not accounting for distribution costs

Fix: measure net ADR by channel and shift inventory toward higher-margin sources.

Mistake 4: Increasing ADR without improving the guest journey

Fix: tighten operations and communications—because higher rates increase expectations.

Conclusion

Average daily rate is a powerful KPI because it reflects how effectively you price your inventory. But the best hoteliers optimize ADR with balance: they raise rate while protecting occupancy quality, distribution margins, and guest satisfaction.

Use ADR alongside occupancy and RevPAR, structure your BAR ladder, sell upgrades earlier, apply smarter stay rules on peak dates, and strengthen direct performance. And as you increase rates, ensure the arrival experience stays frictionless—because reviews and reputation are what make higher ADR sustainable.

Discover how Chekin can help you automate check-in, stay compliant, protect your property, and boost revenue—saving 87% of your time and earning more from every booking.

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FAQ: average daily rate

What is average daily rate (ADR) in hotels?

ADR is the average room revenue earned per paid room sold during a specific period.

How do you calculate average daily rate?

ADR = Room Revenue ÷ Rooms Sold (excluding complimentary or staff rooms in most reporting).

Is a higher ADR always better?

Not always. If ADR rises but occupancy drops, total revenue can fall. Track RevPAR to see the full picture.

What’s the difference between ADR and RevPAR?

ADR measures average price per sold room; RevPAR measures room revenue per available room (ADR × occupancy).

What are the best ways to increase ADR fast?

Improve upsells and room-mix, tighten pricing structure (BAR ladder), reduce reliance on high-commission channels, and protect reviews with smoother operations.