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ADR (average daily rate) and ARR (average room rate)

ADR (average daily rate), also called average room rate (ARR), is the average price paid per occupied hotel room for a period: room revenue divided by the number of rooms sold.

1 min read · Updated: November 5, 2026

Average room rate (ARR) is a key hospitality performance metric that measures the average price guests pay per room over a specific accounting period. The formula for ARR is total room revenue divided by the total number of rooms sold. In practice ARR and ADR are the same measure, so this page covers both.

ADR is one of the three core hotel KPIs, alongside occupancy and RevPAR. It shows what the hotel achieves per sold room but says nothing about how many rooms stayed empty.

ADR (ARR) = room revenue / rooms sold

How it works in practice

Example: a hotel in Leeds sells 50 rooms on a Monday for a total of £5,500, excluding breakfast and extras. ADR = £5,500 / 50 = £110. On a Saturday it sells 70 rooms for £9,800, so ADR rises to £140.

Points to watch:

  • only room revenue counts, not food and beverage or spa,
  • a high ADR with low occupancy can mean rates are too high,
  • compare ADR with the same period last year and the local competitive set.

How technology helps

Pre-arrival upselling, such as offering room upgrades, early check-in or breakfast before the guest arrives, can raise the value of each booking. Ancillary items stay outside ADR when they are sold separately from the room rate, so track them alongside it.

ADR is calculated in the PMS or revenue management system. hotelspot does not calculate ADR, but it reports ancillary revenue, which together with room revenue makes up TRevPAR.

How it works with hotelspot See: G-Commerce Manager

Frequently asked questions

How do you calculate ADR?
Divide room revenue by the number of rooms sold in the same period. For example, £5,500 from 50 rooms gives an ADR of £110.
What is average room rate (ARR)?
Average room rate (ARR) is a hospitality performance metric that measures the average price guests pay per room over a specific accounting period. The formula is total room revenue divided by the total number of rooms sold. In hotel reporting ARR is used interchangeably with ADR.
Does ADR include VAT?
Hotels usually report ADR excluding VAT and excluding breakfast or other items packaged into the rate, so figures are comparable.
All terms

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