Average Daily Rate (ADR)

Average Daily Rate, almost always referred to by its acronym ADR, is a noun and one of the most closely watched performance metrics in hotel management and vacation rental operations. The term originated in the hotel industry as a standard financial benchmark and has since been adopted across short-term rental platforms, property management systems, and channel manager dashboards. Its closest synonyms are average nightly rate and average booking rate, while hotel contexts sometimes use average room rate, abbreviated as ARR, to describe the same calculation.

The mechanics are simple: divide total rental income earned during a period by the number of nights actually booked during that same period. A lakefront cabin that generates $7,500 across 30 booked nights in July has an ADR of $250 for that month. What that figure captures, and what it deliberately excludes, is the key to interpreting it correctly. ADR reflects pricing performance on occupied nights only. Nights when the property sat empty do not enter the calculation at all, which means a strong ADR can coexist with weak overall revenue if occupancy is low.

That limitation is why experienced hosts track ADR alongside RevPAR, which accounts for vacant nights and gives a more complete picture of earning potential. ADR answers the question of how well a property is priced when it books. RevPAR answers the question of how well the property is performing across all available nights, booked or not. Both figures are necessary for a complete read on revenue strategy.

Hosts use ADR to compare performance across seasons, evaluate whether rate adjustments are working, and set pricing targets for the year ahead. Related terms include RevPAR, occupancy rate, dynamic pricing, and revenue management.