Average Daily Rate (ADR) is a core hotel performance metric that shows how much revenue a property earns, on average, for each room it actually sells. It isolates price from volume: ADR answers "what rate are we getting per room sold?", separate from how many rooms are filled.

ADR counts only rooms that were sold and paid for. Complimentary and house-use rooms are excluded, and it usually reflects room revenue alone, not F&B, spa, or other ancillary income.

ADR formula

ADR = Total Room Revenue / Number of Rooms Sold

• Room Revenue: net rooms revenue for the period (typically excluding taxes and, in most definitions, excluding non-room charges).
• Rooms Sold: paid occupied room-nights (excludes complimentary and out-of-order rooms).

Worked example (USD)

A 100-room hotel sells 80 rooms in one night and books $12,000 in room revenue.

ADR = $12,000 / 80 = $150

Over a full week, if the same property sells 560 room-nights and earns $92,400 in room revenue:

ADR = $92,400 / 560 = $165

Why ADR matters

ADR is the cleanest read on your pricing power. Tracked over time and against your competitive set, it tells you whether rate strategy, segmentation, and demand capture are working, without occupancy masking the picture.

But ADR on its own is incomplete. A high ADR with low occupancy can leave a hotel earning less total revenue than a lower ADR with strong occupancy. That is why revenue teams pair ADR with occupancy rate and RevPAR:

RevPAR = ADR x Occupancy Rate

So a $200 ADR at 50% occupancy (RevPAR $100) underperforms a $150 ADR at 80% occupancy (RevPAR $120), even though the first hotel charges more per room.

What counts as a "good" ADR?

There is no universal target. A good ADR is relative to your market, segment, star rating, and season. Benchmark against your competitive set and your own trailing periods rather than an absolute number. A rising ADR is healthy only when it does not come at the cost of occupancy that drags your RevPAR down.

How to increase ADR

Two levers move ADR: pricing and mix.

• Dynamic pricing: adjust rates to real-time demand, events, and booking pace instead of static rack rates.
• Rate fencing and length-of-stay rules: protect higher rates and reward longer bookings.
• Less blanket discounting and OTA reliance: shift demand toward direct, higher-margin channels.
• Sell up the room mix: move guests into higher room categories and premium rooms.
• Add-ons and packages: early check-in, upgrades, and bundles lift the effective rate per room.

Upselling is one of the most direct ADR levers, because every upgrade or premium add-on raises revenue on a room you have already sold. Guestara's hotel upsell software automates upgrade and add-on offers across the guest journey, and hotels using it see up to 200% more upsells, feeding straight into a higher ADR.