Answer
What is ADR and how do I calculate it for a hotel?
ADR (Average Daily Rate) is total room revenue divided by total paid occupied rooms (paid room nights) in a given period. It excludes complimentary stays, staff stays, and any ancillary revenue (F&B, parking, spa). ADR is the average price at which rooms were actually sold, and it multiplies with occupancy rate to produce RevPAR. Most hotels watch ADR daily.
The exact ADR formula
ADR = Total Room Revenue divided by Paid Occupied Rooms. Complimentary stays, staff rooms, and house-use rooms are excluded from both numerator and denominator. According to STR's 2025 industry methodology, this is the standard definition used in STAR Reports and most published industry benchmarks.
Common ADR mistakes
Three patterns recur. One: including comp rooms in the denominator (deflates ADR). Two: treating room-plus-breakfast packages as 100% room revenue (inflates ADR; the F&B portion should be split). Three: including taxes in room revenue (overstates ADR; revenue is net of statutory taxes).
ADR vs RevPAR vs RGI
ADR is pure rate. Occupancy is pure volume. RevPAR (= ADR x occupancy) is rate-times-volume. RGI (Revenue Generation Index) is your RevPAR divided by competitive set RevPAR, indexed to 100. All four are useful; ADR alone is misleading without occupancy context.