What ADR measures.
ADR is average daily rate, the average price you actually got for the rooms you actually sold. It is the cleanest read you have on pricing power, because it ignores the rooms that sat empty and looks only at what guests paid.
That is also its blind spot. ADR cannot tell you whether you sold many rooms or a handful, so a strong ADR and a weak month can happily coexist.
The ADR formula.
ADR = Room revenue / Rooms soldRooms sold means occupied room-nights in the period, so a three-night stay counts three times. Room revenue means rooms only. Food, beverage, spa, parking, and resort fees all stay out of it, which is the single most common way an ADR figure gets quietly inflated.
Complimentary and house-use rooms come out of both halves. They brought in no revenue, so leaving them in rooms sold drags your average down for no reason.
A worked example.
Say a property sold 2,880 room-nights last month and booked $432,000 in room revenue.
| Step | Working | Result |
|---|---|---|
| ADR | $432,000 / 2,880 | $150.00 |
| Occupancy (120 rooms, 30 nights) | 2,880 / 3,600 | 80% |
| RevPAR | $150.00 x 80% | $120.00 |
ADR and rack rate are not the same thing.
Rack rate is what you publish. ADR is what you collected after every OTA discount, corporate agreement, package allocation, and last-minute drop has been applied. The gap between the two is the real story of how you sold the month, and it is usually wider than anyone expects.
If your ADR sits well below rack, the useful question is which channel is doing it. A room sold through an OTA at a 15% commission lands in ADR at the net rate you actually keep, so channel mix moves this number as much as pricing does.
Reading the number.
ADR rising is only good news if occupancy held. A jump in ADR paired with a slide in occupancy usually means you priced above the market and lost volume, and RevPAR will tell you whether the trade was worth it.
Watch it by segment rather than in aggregate. A blended ADR that holds steady can easily be hiding corporate rate erosion offset by a strong leisure weekend, and those two want opposite responses from you.
For the volume side of the same month, use the occupancy calculator.
