The average daily rate (ADR) is a hotel performance metric showing the average revenue earned per sold room in a given period.
What Is the Average Daily Rate (ADR)?
The average daily rate (ADR) is a hotel metric that shows the average realized room rental cost per day for rooms that were actually sold. You calculate ADR by dividing the total room revenue by the number of rooms sold in a specific period.
This matters because ADR tells you how much, on average, guests are paying for a room night. For example, if a hotel earns $50,000 in room revenue from 200 sold rooms in a day, its ADR is $250. That single number helps hotels and travel managers judge price levels, compare properties, and track performance over time.
In business travel and expense management, ADR helps you understand how expensive your hotel nights really are, compare negotiated rates with market reality, and track whether travelers are booking within your preferred rate bands.
Understanding the Average Daily Rate (ADR) in Detail
The ADR Formula and Key Components
The basic formula is:
ADR = Total Room Revenue ÷ Number of Rooms Sold
Where:
Total Room Revenue This is the money earned from selling guest rooms only—not including meeting rooms, restaurants, parking, or other services.
Number of Rooms Sold This is the count of rooms that were actually sold and occupied or at least reserved as paid. It does not include complimentary or out-of-order rooms.
Example:
Total room revenue for the day: $60,000
Rooms sold: 240
ADR = $60,000 ÷ 240 = $250
What ADR Includes and Excludes
Includes
Excludes
Room charges paid by guests
The room rate after discounts, such as corporate rates or promotions
Room revenue before taxes and most fees
Free or complimentary rooms
Out-of-order or blocked rooms
Revenue from:
1. Food and beverage
2. Meeting or banquet rooms
3. A spa or parking
4. Resort fees, if tracked separately
This focus on room revenue only is what makes ADR a clean measure of how rooms are priced and sold.
ADR in Hotel and Travel Management
ARD in Hotels
ARD in Professional Travel Management
Measure pricing performance over time
Compare days, weeks, seasons, and special events
Evaluate revenue management strategies and promotions
Understand the average cost per room night in their hotel program
Compare cities, suppliers, and chains
Monitor whether travelers are using preferred or negotiated rates
Modern, all-in-one travel platforms like Navan can surface ADR-like insights for your company’s stays (not just at the hotel level) so that you can see what your travelers are actually paying per night.
Common Misconceptions About ADR
“ADR includes all hotel revenue.”
No. ADR looks at room revenue only, not the total hotel revenue.
“A higher ADR always means better performance.”
Not necessarily. A very high ADR with low occupancy might still be worse overall than a moderate ADR with high occupancy.
“ADR equals the rack rate or posted rate.”
ADR is the average realized rate after discounts, negotiated rates, and promotions for rooms that actually sold.
Why the Average Daily Rate (ADR) Matters
Companies that understand and track ADR typically have better control over hotel costs and program performance.
Here is why:
A Clear View of What You Really Pay per Night
ADR tells you the average price you actually paid, not the price shown on a single booking. This helps you:
See real cost trends by city, brand, or traveler group
Understand if negotiated rates are being used or exceeded
Smarter Hotel Negotiations
When you know your historical ADR at certain properties or in specific markets, you can:
Negotiate corporate rates from a data-backed position
Ask hotels to beat or match your historical ADR
Compare offers from different properties fairly
Policy and Cap Setting
ADR helps you:
Set realistic hotel caps, for example, “Our average in New York City is $280; we will set the nightly cap at $300.”
Adjust caps by season, as events and holidays can push ADR up
Program Performance Measurement
Companies using ADR-like metrics for their internal hotel spend can see:
How much they save by steering travelers to preferred hotels
The impact of new policies or booking tools on the average nightly cost
Benchmarking Across Markets and Time
You can compare:
ADR this year versus last year
ADR in one region versus another
ADR at preferred hotels versus non-preferred bookings
Platforms like Navan can make these comparisons easy with built-in analytics.
How the Average Daily Rate (ADR) Works in Practice
ADR at the Hotel Level
ADR in Corporate Travel Analytics
From a hotel’s point of view, here is how ADR is used day to day:
1. Collect daily room revenue. Sum up all income from sold rooms for a specific date or period.
2. Count the rooms sold. Count only rooms that were sold or occupied and generated room revenue. Exclude complimentary and out-of-service rooms.
3. Calculate the ADR. Apply the formula: ADR = Total Room Revenue ÷ Rooms Sold.
4. Analyze and compare. Revenue managers compare ADR by weekdays versus weekends, look at ADR during events versus normal days, and adjust rates and promotions to hit revenue targets.
For a company, the logic is similar but focused on your bookings:
1. Collect room spend data. From bookings, card transactions, and expense reports, gather the total spent on room rates—ideally excluding taxes and non-room charges—and the number of room nights purchased.
2. Define the period and scope. Decide what you want to analyze: one city or country, one chain or group of hotels, or a month, quarter, or year.
3. Calculate the company ADR for that slice. Company ADR for City X in Q1 = Total Room Revenue for That City in Q1 ÷ Number of Room Nights in That City in Q1.
4. Use this for decisions. Examples include spotting cities where your ADR is rising quickly and investigating why, identifying hotels with a very high ADR compared to their peers and then negotiating or adjusting policy, and checking if travelers are staying within your target ranges.
When you use a platform that combines Navan Travel and Navan Expense, much of this data collection and calculation can be automated.
Even though Hotel A earned more total revenue, Hotel B has a higher ADR, meaning it earned more per sold room on average. As a travel manager, you might prefer Hotel A if it offers lower rates and still meets quality needs, or you could use this data to push Hotel B for better corporate pricing.
Scenario B: Company Hotel Spend in One City
Your company’s bookings in London over a quarter:
Total room spend (room charges only): £420,000
Total room nights: 1,500
Company ADR (London): £420,000 ÷ 1,500 = £280
If your policy target for London is £250 per night, this tells you that either your caps are unrealistic because the market is expensive, or travelers are choosing higher-end hotels than planned. You can then adjust your caps or steer bookings to better-value properties.
Scenario C: The ADR vs. Occupancy Trade-Off
A hotel has:
A high-season week:
ADR: $320Occupancy: 95 percent
A low-season week:
ADR: $200Occupancy: 60 percent
The average ADR across the period is not enough to understand performance. You also need occupancy and revenue per available room (RevPAR). But for a company, watching ADR over time still shows how prices shift seasonally, helping you adjust expectations and budgets.
Common Challenges and Solutions
Challenge 1: Confusing ADR with a nightly cap or budget rate.
This happens when teams treat ADR as a target rate rather than a reporting metric.
Solution:
Use ADR mainly as a measurement of what is happening.
Set hotel caps separately, using ADR as one input, not the only one.
Challenge 2: Mixing taxes and fees in with room revenue.
If you include taxes, resort fees, and extras, your ADR becomes inflated and inconsistent.
Solution:
Try to separate the room rate from taxes, resort or mandatory fees, and parking, meals, and other ancillaries.
Configure your expense system, like Navan Expense, to split these automatically where possible.
Challenge 3: Comparing ADR across very different markets.
A $300 ADR might be normal in New York City but high in a smaller city.
Solution:
Compare ADR within similar markets—city to city or region to region.
Use local benchmarks or indices when possible.
Challenge 4: Incomplete or inconsistent data.
If some bookings come through unmanaged channels or do not show a clean room rate, your ADR will be off.
Solution:
Encourage or require bookings through your main platform, like Navan Travel.
Consolidate hotel spend data from cards, the GDS, and expense tools.
Standardize how travelers enter hotel expenses.
Challenge 5: Overfocusing on ADR without occupancy or volume.
A very high ADR with very few nights may not be desirable.
Solution:
Always interpret ADR with the total nights booked, the total spend, the trip purpose, and the traveler segment.
For hotels, RevPAR and occupancy are key; for companies, the cost per trip and policy compliance matter too.
The Average Daily Rate (ADR) vs. Related Concepts
Aspect
ADR (Average Daily Rate)
Occupancy Rate
RevPAR (Revenue per Available Room)
Definition
The average room revenue per room sold
The percentage of available rooms that are occupied
The room revenue per available room—sold or not
Formula
Room Revenue ÷ Rooms Sold
Rooms Sold ÷ Rooms Available
Room Revenue ÷ Rooms Available or ADR × Occupancy
Focus
The price level of sold rooms
The volume of rooms used
Combined price and volume performance
Used By
Hotels, revenue managers, and travel managers
Hotels and operators
Hotels, investors, and analysts
Related Terms and Concepts
Occupancy Rate: The percentage of a hotel’s available rooms that are sold during a period. While ADR shows the average price for sold rooms, occupancy shows how many rooms are being used. Together, they tell a fuller performance story.
RevPAR (Revenue per Available Room): A key hotel metric that combines ADR and occupancy. It is calculated as room revenue divided by available rooms or as ADR multiplied by occupancy. It measures how efficiently a hotel is earning revenue from its overall room inventory.
Corporate Negotiated Rate: A discounted room rate that a company agrees on with a hotel or chain. Comparing your realized ADR against these negotiated rates helps you see if travelers are actually using them.
Dynamic Pricing: When hotels adjust room rates constantly based on demand, events, and booking patterns. Dynamic pricing affects ADR over time, especially in busy markets or during peak events.
Total Trip Cost: All costs associated with a business trip, including airfare, hotel, ground transport, meals, fees, and taxes. The hotel ADR is one important piece of this broader cost picture.
Spend per Trip or Spend per Traveler: Metrics used by travel managers and finance teams to understand the average cost of business travel. ADR feeds into these metrics by defining the hotel cost portion.
Travel Management Company (TMC): A company that helps organizations manage booking, policy, and reporting. Modern TMCs and platforms like Navan can report ADR-like metrics for your program automatically.
From market-driven chaos to benchmarked savings: Take control of your hotel ADR today.
Use the formula: ADR = Total Room Revenue ÷ Number of Rooms Sold.
Make sure that the room revenue includes only money from room charges (before taxes and most fees) and that the number of rooms sold counts only paid rooms, not complimentary or out-of-order rooms. You can calculate the ADR for a day, week, month, or any defined period.
Not quite. The nightly room rate you see when booking is one price for one night. ADR is the average realized rate across many rooms and nights after considering discounts, corporate deals, and different room types.
ADR helps you:
Understand the real average cost per room night that your company is paying.
Compare hotel spend across cities, properties, and time.
Support better negotiations with hotel partners.
Set more accurate hotel caps that are aligned with market realities.
Without ADR, you only see isolated prices, not the bigger pattern.
You can:
Show your historical ADR and room-night volume at a property or in a market.
Ask hotels to offer corporate rates below or around that ADR in exchange for more volume.
Compare multiple hotel proposals using your expected ADR instead of just headline “discounts” on the rack rate.
Clear ADR data from tools like Navan helps you negotiate from a position of strength.
In standard hotel industry practice, ADR is based on room revenue before taxes and typically excludes other fees like resort fees or parking. For internal company analysis, you should be consistent: decide if you will calculate ADR on pre-tax room rates only, and track taxes and mandatory fees separately for clarity.
Yes. Think of your “company ADR” as: Company ADR = Total Room Spend for a Period ÷ Total Room Nights for That Period. This gives you a simple, powerful number to compare hotel spend across cities, brands, and time. Many travel and expense platforms, including Navan, can calculate this automatically.
There is no single “good” ADR. It depends on the city and neighborhood, the time of year and local events, and the hotel class—budget, midscale, upscale, or luxury. For corporate programs, “good” often means the ADR is aligned with market benchmarks, is stable or improving relative to value and traveler satisfaction, and is better at preferred hotels than at non-preferred options.
Last room availability (LRA) is a hotel industry practice that ensures a hotel will provide a travel agency or booking platform with the last available room in its inventory, even during peak periods or high demand, allowing for maximum booking flexibility.
Value-added tax (VAT) is a consumption tax levied at each stage of the production and distribution chain, ultimately borne by the end consumer and calculated as the difference between the value of goods and services sold and the cost of materials and services used in their production.