- Average daily rate
Average Daily Rate (commonly referred to as ADR) is a statistical unit that is often used in the
lodgingindustry. The number represents the average rental income per occupied room in a given time period. ADR along with the property's occupancy are the foundations for the property's financial performance. The ADR can calculated by dividing the room revenue by the number of rooms sold.
* [http://www.cretycoon.com/index.php?option=com_content&task=view&id=22&Itemid=35 Introduction to Hotel Statistics]
ADR is one of the commonly used financial indicators in hotel industry to measure how well a hotel performs compared to its competitors and itself (year over year). It is common in the hotel industry for the ADR to gradually increase year over year bringing in more revenue. However, ADR itself is not enough to measure the performance of the hotel. One should combine ADR, occupancy and RevPar( revenue per available room) to make a sound judgment on hotel performance. Recently, some hotels have adopted a new concept called BAR [best available rate] in addition to ADR.
Average Daily Rate formula is rooms revenue earned divided by number of rooms that earned revenue. House use and complimentary rooms are excluded from the denominators.
However, many hotels calculate ADR or ARR (Average Room Rate) using the formula: Room Income/(No. of rooms sold + Complimentary rooms) i.e. 'House Use' rooms are excluded. The logic for including complimentary rooms is that they are given for business reasons e.g. x rooms complimentary over y paid rooms as part of a business deal. This implies that the inclusion of this free unit is actually an inclusion in the revenue deal. 'House Use' rooms or those occupied by hotel employees or management are excluded as they are available for sale and not generating income.
Wikimedia Foundation. 2010.
Look at other dictionaries:
Average Daily Rate - ADR — A metric widely used in the hospitality industry to indicate the average realized room rental per day. Average daily rate is one of the core indicators along with other metrics such as occupancy rate and revenue per available room used to measure … Investment dictionary
Average Daily Balance Method — A finance/accounting method where costs (and interest) are based on the amount(s) owing at the end of each day. Most department store credit cards use this system. Interest payable is calculated daily, this results in less interest payable… … Investment dictionary
Annual average daily traffic — Annual average daily traffic, abbrevated AADT, is a measure used primarily in transportation planning and transportation engineering. It is the total volume of vehicle traffic of a highway or road for a year divided by 365 days. AADT is a useful… … Wikipedia
average — n Average, mean, median, norm, par denote something and usually a number, a quantity, or a condition that represents a middle point between extremes. Of these words average, mean, median, and par are also used as adjectives. Average is an… … New Dictionary of Synonyms
Daily Times Chronicle — Type Daily newspaper Format Broadsheet Owner Woburn Daily Times Inc. Publisher James D. Haggerty III Founded 1901 Headquarters 1 A … Wikipedia
Average — An arithmetic mean of selected stocks intended to represent the behavior of the market or some component of it. One good example is the widely quoted Dow Jones Industrial Average, which adds the current prices of the 30 DJIA s stocks, and divides … Financial and business terms
average — An arithmetic mean return of selected stocks intended to represent the behavior of the market or some component of it. One good example is the widely quoted Dow Jones Industrial Average, which adds the current prices of the 30 DJIA stocks, and… … Financial and business terms
rate — The cost of debt service paid by a borrower or issuer to a lender or investor. The rate is expressed as an annual percentage of the amount borrowed. For some notes and bonds that pay interest semiannually, the semiannual interest due to the… … Financial and business terms
Average Rate Option - ARO — An option used to hedge against fluctuations in exchange rates by averaging the spot rates over the life of the option and comparing that to the strike price of the option. Average rate options are typically purchased for daily, weekly or monthly … Investment dictionary
Noon Average Rate Contract - NARC — A type of currency forward contract that refers to the Bank of Canada s average noon rate for foreign exchange as a benchmark. The contract s negotiated exchange rate is compared to the noon rate and the two parties settle the difference in cash … Investment dictionary