What is ADR / ARR?
ADR = Average Daily Rate
ARR = Average Room Rate
Both terms mean the same thing: the average price at which you sell your rooms. ADR is more commonly used internationally, ARR in India.
ADR Formula
ADR = Total Room Revenue ÷ Number of Rooms Sold
Important: ADR only considers SOLD rooms, not all available rooms. This is different from RevPAR which considers all rooms.
ADR Calculation Example
Example: Wednesday Night at a City Hotel
Total Rooms in Hotel80
Rooms Sold Tonight60
Total Room Revenue₹2,40,000
ADR₹4,000
Calculation: ₹2,40,000 ÷ 60 rooms sold = ₹4,000 ADR
ADR vs ARR: What's the Difference?
| ADR | ARR |
|---|---|
| Average Daily Rate | Average Room Rate |
| International term | Common in India |
| Used by OTAs, global chains | Used in Indian hotel reports |
| Same formula, same meaning | |
Where ADR is Used
| Use Case | Example |
|---|---|
| Pricing Analysis | "Our ADR dropped ₹500 this month - why?" |
| Segment Performance | "Corporate segment ADR is ₹3,500, OTA is ₹4,200" |
| Rate Strategy | "We need to push ADR up during Diwali week" |
| Competitor Benchmarking | "Our ADR is 10% below comp set average" |
| Owner Reports | Monthly P&L shows ADR alongside occupancy |
ADR vs RevPAR
Why Both Metrics Matter
Scenario: Your hotel has 100 rooms. Tonight you sold 50 rooms at ₹5,000 each.
ADR₹5,000
RevPAR₹2,500
The difference: ADR shows you're getting good rates. RevPAR shows you're only filling half your hotel. You might be pricing too high!
How to Improve ADR
- Rate Parity: Don't undercut your own rates on different channels
- Upselling: Train front desk to offer room upgrades
- Package Deals: Bundle rooms with breakfast/experiences at higher price point
- Reduce Discounting: Cut back on excessive promotions and coupons
- Segment Mix: Increase proportion of high-paying segments
- Dynamic Pricing: Raise rates when demand is strong
Pro Tip: Track ADR by segment (OTA, direct, corporate, walk-in). You'll often find one channel dragging down your overall ADR. Fix that channel specifically.
Typical ADR by Hotel Type (India)
| Hotel Category | Typical ADR Range |
|---|---|
| Budget / Economy | ₹1,000 - ₹2,500 |
| Mid-Scale | ₹2,500 - ₹5,000 |
| Upscale | ₹5,000 - ₹10,000 |
| Luxury | ₹10,000 - ₹50,000+ |
Note: ADR varies significantly by city, location, and season.
Common ADR Mistakes
- Including complimentary rooms: Staff rooms, comp stays shouldn't be in ADR calculation
- Mixing room-only and package rates: Track separately if possible
- Ignoring taxes: ADR is typically calculated on room revenue before taxes
- Chasing ADR blindly: High ADR with low occupancy isn't always good