Average Daily Rate (ADR)
Average Daily Rate (ADR)
Average Daily Rate (ADR) is the average rental income earned per occupied room or property, per night. In vacation rentals, it shows what guests actually paid on average for a night’s stay, excluding unoccupied nights.
How to Calculate ADR
The formula is straightforward:
ADR = Total Rental Revenue ÷ Number of Nights Booked
Example: If a cottage earns $15,000 from 150 booked nights, the ADR is $100.
Why ADR Matters for Hosts
- Evaluate pricing strategies to see if your nightly rates are competitive.
- Benchmark performance against similar properties in your area.
- Spot revenue opportunities by adjusting rates during high-demand periods.
Factors That Influence ADR
- Location — Lakefront and prime destinations command higher rates.
- Seasonality — Busy summer weekends versus quieter shoulder seasons.
- Local events — Holidays and festivals can lift demand and pricing.
- Amenities — Hot tubs, docks, and luxury finishes justify higher rates.
- Market conditions — Competitor pricing and broader economic trends.
Limitations of ADR
- ADR doesn’t reflect occupancy; high ADR with few bookings still reduces revenue.
- It excludes add-ons like cleaning fees, upsells, or activity packages.
- Without context, ADR can mask seasonal fluctuations or market shifts.
Quick Examples
- Lakefront home: $12,000 over 100 booked nights → ADR = $120.
- Mountain cabin: $15,000 over 150 booked nights → ADR = $100.
Tip for Hosts: Track ADR alongside occupancy rate. Together, they show how pricing impacts total revenue.
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