ADR stands for average daily rate. It is total accommodation revenue divided by the number of nights actually booked, and it measures pricing power rather than overall performance. Because it counts only booked nights, ADR can rise while total revenue falls, which is why it should never be read on its own.
The formula, and what it hides
ADR = accommodation revenue ÷ nights booked
A property earning $72,000 across 240 booked nights has an ADR of $300. Raise prices until only 180 nights book at $360 and ADR climbs to $360 while revenue falls to $64,800. ADR improved and the business got worse.
| Metric | Formula | Answers |
|---|---|---|
| ADR | Revenue ÷ nights booked | What do we charge when we sell? |
| Occupancy | Nights booked ÷ nights available | How often do we sell? |
| RevPAR | ADR × occupancy | What does the property actually earn? |
How to use ADR properly
- Compare it seasonally, not annually. An annual ADR blends a $520 July with a $180 November and describes neither.
- Watch it against occupancy. Rising ADR with holding occupancy is pricing power. Rising ADR with falling occupancy is usually overpricing.
- Check whether fees are included. Cleaning fees are sometimes folded into quoted ADR and sometimes not, which makes cross-source comparisons unreliable.
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Frequently asked questions
What is a good ADR for a short-term rental?
There is no universal figure, because ADR is a function of market, capacity, and season. What matters is your ADR relative to comparable properties in the same submarket during the same period, and whether it holds without sacrificing occupancy.
What is the difference between ADR and RevPAR?
ADR divides revenue by nights booked, so it ignores empty nights. RevPAR is ADR multiplied by occupancy, which spreads revenue across every available night. RevPAR is the better single measure of performance.
Does ADR include cleaning fees?
It depends on the source. Some platforms and data tools include guest-paid cleaning fees in the rate, others report accommodation revenue only. Confirm the definition before comparing figures from different sources.