ADR in hotel reports: meaning, formula and what counts as room revenue

Your standard rate card says ₹3,000. Your best weekend sold at ₹3,600. A long-staying corporate guest pays ₹2,200. So what did a room actually earn you last month? That is what ADR in hotel reports answers: the average price you got for each room you sold. It is one of three numbers every owner should know cold, alongside occupancy and RevPAR, and it is the easiest of the three to get wrong, because the answer depends on what you put into "room revenue". This guide covers the meaning, the formula, the counting rules, and a worked month for the same 20-room hotel used across this series.

What does ADR mean?

ADR is the full form of average daily rate. In India you will also hear average room rate, or ARR. They are the same number.

ADR is not your standard rate (rack rate), and it is not the rate on your website. It is what guests actually paid, after discounts, packages, corporate deals and OTA promotions, averaged over every room-night you sold.

The word "daily" confuses people. It does not mean you only calculate it for one day. It means the rate is per room per night, and you can work it out for a single night, a week, a month or a year. For a single night, a 20-room hotel that sold 13 rooms for ₹31,850 in room revenue had an ADR of ₹31,850 ÷ 13 = ₹2,450 that night. For a month, add up the month's room revenue and the month's paid room-nights first, then divide once. Do not average 30 nightly ADRs: a quiet Tuesday with 6 rooms sold would count as much as a full Saturday, and the answer would be wrong.

The gap between your standard rate and your ADR is worth watching on its own. If the rate card says ₹3,000 and ADR is ₹2,400, guests are paying on average 20 per cent below your published price. Some of that is deliberate (corporate deals, long stays, weekday offers). Some of it is leakage: discounts given at the desk without approval, or old promotions still running on an OTA. Ask which is which every month.

It sits with two sister numbers:

• Occupancy rate = rooms sold ÷ rooms available × 100. The share of rooms you sold. See our occupancy rate formula guide.
• RevPAR = room revenue ÷ rooms available. Revenue spread over every room, sold or empty. See what is RevPAR.

Because all three use the same counts, they always reconcile: occupancy × ADR = RevPAR.

What counts as room revenue

Room revenue is the money earned from renting rooms for the night, net of discounts. Everything else stays out. Decide each line once, write it on your report, and keep it the same every month.

Complimentary rooms: our convention

The convention across this series is simple: rooms sold means paid room-nights only, and complimentary rooms are excluded from occupancy, ADR and RevPAR alike. Industry benchmark reports also leave complimentary rooms out of rooms sold. Show the number of complimentary room-nights as its own line, so the owner can see how many rooms went free and why.

GST stays out

GST on a room is set by the GST band for that room's tariff per night. It is never revenue: you collect it and pay it on. ADR is always calculated on the room charge before GST, so that a change in tax does not look like a change in your pricing. For the bands themselves, read our guide to GST on hotel rooms and restaurants.

Breakfast and meal plans

Many Indian properties sell on meal plans: room only (EP), with breakfast (CP), with breakfast and one meal (MAP), or all meals (AP). If you sell a CP rate at ₹2,800 and the breakfast is worth ₹300 a guest, illustratively, then ₹2,500 is room revenue and ₹300 goes to food and beverage. Pick the meal values once, with your CA, and use them every time. If you leave the meals in, your ADR is inflated, and comparing a CP month with an EP month becomes misleading.

A worked month for a 20-room hotel

These figures are illustrative and match our occupancy and RevPAR guides. A 20-room hotel in Mysuru, November (30 nights): 600 room-nights available, 390 paid room-nights sold, 6 complimentary room-nights.

First, separate room revenue from everything else on the guest bills:

Only the first line is room revenue. Now split it by channel:

ADR = ₹9,36,000 ÷ 390 = ₹2,400.

With the same counts:

• Occupancy = 390 ÷ 600 × 100 = 65 per cent
• RevPAR = ₹9,36,000 ÷ 600 = ₹1,560, which is 65 per cent × ₹2,400

Three common mistakes would each give a different, wrong ADR:

• Using the total billed (₹11,40,000 ÷ 390) gives ₹2,923, about 22 per cent too high.
• Including GST only (₹9,82,800 ÷ 390) gives ₹2,520.
• Counting the 6 complimentary rooms as sold (₹9,36,000 ÷ 396) gives ₹2,364.

Net ADR: what you keep after commission

Standard ADR uses the room revenue the guest paid, before any commission. That keeps it comparable with other hotels and with past years. But the owner also wants to know what stays in the business.

Illustratively, at 18 per cent commission on the ₹4,83,000 of OTA room revenue, commission is ₹86,940. Room revenue after commission is ₹8,49,060, and net ADR is ₹8,49,060 ÷ 390 = about ₹2,177.

The OTA rooms looked like ₹2,300 a night. After commission they earned about ₹1,886. Direct rooms at ₹2,600 carried only payment charges. That gap is why our guide to cutting OTA commission matters for the same 20-room size. Commission rates depend on your own contract, so use yours, not ours.

How to calculate ADR every month: a checklist

1. Make sure every night of the month was closed in your end-of-day close, so the room charges are final. Our night audit process guide covers this.
2. Take total room charges after discounts, before GST.
3. Take out the agreed meal value from every package rate.
4. Add extra-bed, early check-in, late check-out and collected no-show charges, if your convention counts them.
5. Count paid room-nights sold. Leave complimentary rooms out and list them separately.
6. Divide. Round to the nearest rupee.
7. Split by channel, room type and weekday or weekend, using the same rules.
8. Put it beside occupancy and RevPAR for the same month, and the same month last year.

Reading ADR well

• Read it with occupancy. ADR alone can be pushed up by refusing every discount and leaving rooms empty. Occupancy alone can be pushed up by selling cheaply. RevPAR shows whether the trade worked.
• Look at it by day and room type. A month's ₹2,400 might be ₹3,100 on Saturdays and ₹2,050 on Tuesdays. The weekday number is usually where the work is.
• Watch the channel mix. If ADR rose because more rooms came through an OTA promotion with a higher headline rate, check net ADR before celebrating.
• Use it to set floors, not just targets. Know the lowest rate below which a room-night does not cover its cost to clean, light and staff. Revenue management, covered in our guide to hotel revenue management, starts there.

Break-even ADR: the number under the number

ADR becomes far more useful once you know the ADR at which the hotel stops losing money. You need two figures from your accounts.

• Cost per occupied room-night. What one sold room costs that an empty room does not: laundry, amenities, extra power and water, the housekeeping time, and the breakfast if you sell CP.
• Fixed costs per month. Salaries, rent or loan instalments, insurance, licences, software, the electricity a building uses even when empty.

An illustrative example for our 20-room hotel:

At an ADR of ₹2,400, the hotel clears break-even by ₹212 a room-night on rooms alone, before restaurant profit. Two things follow:

1. Break-even ADR falls as occupancy rises, because fixed costs are spread over more rooms. At 450 room-nights it drops to about ₹1,983. This is why a cheap weekday corporate deal can still be worth taking.
2. The floor for any single extra room is much lower than break-even ADR. Once fixed costs are paid, an extra room sold at ₹1,200 directly still adds ₹550. On an OTA at 18 per cent commission, the same ₹1,200 adds only ₹334. Know both numbers before you discount.

Your own costs will differ. Work them out with your accountant once a year and update them when salaries or power tariffs change.

ADR for hostels and homestays

The idea is the same; the unit changes.

• Hostels usually track average bed rate: dorm bed revenue ÷ beds sold. Keep private rooms on their own line with a normal ADR, because a ₹700 bed and a ₹2,500 private room averaged together tell you nothing.
• Homestays sold as a whole property (a villa or a four-bedroom bungalow booked by one family) should still divide the booking into room-nights. A whole-house booking of ₹36,000 for three nights in a four-room homestay is 12 room-nights at an ADR of ₹3,000. That lets you compare whole-house stays with room-by-room stays honestly.
• Long stays at a monthly rate count the same way: the month's room charge ÷ the nights stayed. A ₹45,000 month for 30 nights is an ADR of ₹1,500 for that room, which may be fine if it fills a weekday gap.

Where GuestHawk fits

GuestHawk's billing applies the right GST on every line, which keeps room revenue clean, and the daily owner digest sends revenue, occupancy and rate every morning.

Frequently asked questions

Sources

1. STR: How to read a STAR report
2. STR: Hotel profit and loss glossary
3. CoStar STR Benchmark: glossary of hotel performance terms

• Revenue management
• Pricing
• GST