What is Average Daily Rate (ADR)?


Also known as	ADR
Category	Hotel performance, travel spend metrics, reporting
Common in	Hotels, travel management, revenue management, corporate travel analytics

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

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

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.

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.

Average Daily Rate (ADR) In Practice

Scenario A: Comparing Two Hotels

Hotel A:
Hotel B:

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:
A low-season week:

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.

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

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.

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