Full Definition
ADR = Total Room Revenue ÷ Number of Occupied Rooms. It represents the average price paid per room per night, excluding complimentary rooms. Unlike RevPAR, ADR only counts occupied rooms — it measures pricing power rather than occupancy efficiency. Raising ADR without sacrificing occupancy is the primary revenue management goal in hospitality.
Example
A 40-room motel earns $3,200 on a Tuesday with 28 rooms occupied. ADR = $3,200 ÷ 28 = $114.29. If only 20 rooms were occupied at the same total revenue, ADR would be $160.
Why It Matters
ADR is the pricing half of the hotel performance equation. Orlando theme park corridor hotels command $180–280 ADR vs. $65–100 in secondary markets — a primary driver of why I-Drive cap rates are lower (better income quality) despite similar acquisition prices.
Related Terms
RevPAR (Revenue Per Available Room)
Hotel performance metric: total room revenue divided by total available room-nights. Combines occupancy and rate into a single metric.
Occupancy Rate (Hotels)
The percentage of available hotel rooms that are occupied during a given period. Key demand metric for hotel underwriting.