Average daily rate (ADR) is the average accommodation revenue earned per booked night. ADR = accommodation revenue ÷ booked nights. ADR index compares your ADR with comparable properties over the same dates: ADR index = your ADR ÷ market ADR. An ADR index of 1.04 (or 104 in hotel reports) means you charged 4% more per booked night than the market.
In hotels and in vacation rentals
- Hotels: ADR is room revenue ÷ rooms sold, and complimentary and house-use rooms are usually excluded. ADR index is called ARI (average rate index). Hospitality Net’s example: an ADR of $120 against a comp set ADR of $100 gives an ARI of 120 (Hospitality Net).
- Vacation rentals: ADR is accommodation revenue ÷ booked nights, excluding cleaning fees, taxes and pass-through fees. Owner stays and zero-rate nights are excluded from booked nights.
Formulas
- ADR = accommodation revenue ÷ booked nights
- ADR index = your ADR ÷ market ADR
- ADR = RevPAR ÷ occupancy
- RevPAR index = MPI × ADR index
Index = yours ÷ market × 100. Above 100 beats the market. Some reports show it as a ratio: 95.3 is 0.953.
What to include and exclude
| Item | Include in ADR? | Why |
|---|---|---|
| Nightly accommodation charge | Yes | This is the rate |
| Weekly or monthly stay discounts | Yes, net of discount | They reduce what the night actually earned |
| Channel promotions (e.g. platform discounts) | Yes, net | Same reason |
| Cleaning fees | No | Mostly cost recovery; market data usually excludes them |
| Taxes, levies | No | Not revenue |
| Pet, linen, early check-in fees | No (report separately) | Ancillary revenue |
| Owner stays, comp nights | Exclude from both revenue and nights | Not a sale |
| Cancelled bookings with retained payment | Policy choice; be consistent | State it in your method |
Be consistent about channel commission. Gross ADR (before commission) is the usual market comparison. Net ADR matters for owner payouts.
Worked example
A listing books three stays in a month:
- 2 nights at $300 a night = $600
- 7 nights with a weekly discount, totaling $1,680 ($240 a night)
- 3 nights at $280 a night = $840
Total accommodation revenue = $3,120 over 12 booked nights. ADR = $3,120 ÷ 12 = $260.
The market ADR for comparable listings in the same month is $275.
- ADR index = $260 ÷ $275 = 0.945, or about 0.95 (95 on the hotel scale)
The listing sold its nights about 5.5% cheaper than comparable listings. Before raising rates, check MPI. If occupancy is well above the market, the discount bought volume and higher rates are likely to hold. If occupancy is also below the market, a lower rate is not the cause, and raising it will not help. You can check both at once in the RevPAR index calculator.
Why ADR can mislead on its own
- Long stays drag it down. A 28-night stay at a monthly rate can lower a listing’s ADR sharply while lifting occupancy. Check whether one reservation dominates.
- Mix shifts it. A portfolio adding studios will see ADR fall even if every listing’s pricing improved. Compare like for like, or use ADR index by segment.
- Unverified rates. Some bookings arrive without a reliable nightly rate (manual bookings, imported reservations, channel adjustments). If a meaningful share of booked nights lack a verified rate, the ADR index is unreliable. Our software checks this share before trusting the number.
- High ADR, empty calendar. ADR ignores unsold nights. A listing can lead the market on ADR and still trail it on RevPAR.
Read ADR index with MPI
| ADR index | MPI | Usually means |
|---|---|---|
| ≥ 1.03 | < 0.97 | Priced out |
| < 0.97 | ≥ 1.03 | Underpriced |
| ≥ 1.03 | ≥ 1.03 | Strong product or underestimated comp set |
| < 0.97 | < 0.97 | Product or visibility issue, not price |
These bands are our rule of thumb, not an industry standard. Hospitality Net makes the same point for hotels: “an ARI of 115 looks impressive on its own, but if your MPI is sitting at 85, it could indicate that your rates are deterring bookings” (Hospitality Net).
How to raise ADR without losing nights
- Price far-out dates higher and discount gradually from about 60 days out, rather than cutting hard in the last week.
- Offset channel discounts by lifting the base rate, so the net rate is unchanged.
- Set event and holiday rates 90 or more days ahead, before early bookers take them at standard prices.
- Keep weekend minimums short outside peaks, so each weekend sells as its own stay at the weekend rate.
- Review base prices quarterly against comparable listings, adjusting for view, finish and parking.
If you’d like a second opinion on your rates, start with a free revenue audit.
FAQ
How do you calculate average daily rate?
Divide accommodation revenue by the number of booked nights. $3,120 over 12 nights is an ADR of $260.
What does ADR mean in the hotel industry?
Average daily rate: room revenue divided by rooms sold for a period. It is one of the three core hotel KPIs with occupancy and RevPAR.
What is ADR index (ARI)?
Your ADR divided by the market’s or comp set’s ADR. 1.00 (or 100) is parity, and above it means you charge more than the market.
Should Airbnb ADR include cleaning fees?
No, if you want to compare with market data or report pricing performance. Report cleaning fees separately.
Is a higher ADR always better?
No. If it costs more in empty nights than it gains in rate, RevPAR falls. Judge ADR changes by their effect on RevPAR index.
What is a good ADR?
There isn’t one number. ADR only means something against comparable listings on the same dates, which is why we use ADR index. An ADR index near 1.00 with an MPI at or above 1.00 is a healthy position. A high ADR index with a low MPI usually means you are priced out.
Should I use gross or net ADR?
Use gross ADR (before channel commission) to compare with market data, and net ADR when you calculate owner payouts. Say which one you are using every time.
Related: MPI · RevPAR · Booking pace · Calculator · Market reports