Your hotel’s average daily rate is …
*Please note this is an estimation only.
What is average daily rate (ADR)?
Your average daily rate is the average rental income per paid occupied room over 30 days.
Along with your RevPar (revenue per available room) and Occupancy Rate, your ADR (average daily rate) is one of the three main success metrics used to see how well your small property is doing.
ADR is a key performance indicator, and it’s important that you know what your ADR is and how to use it effectively as part of your overall pricing strategy.
What does ADR mean for hotels?
The ADR allows you to see how your hotel is performing during a specific period of time. By understanding what your average daily rate is during peak seasons and slow seasons, you can create promotional campaigns that can help drive traffic and increase revenue during these periods.
It also provides insight into how you stack up against the local competition. Ultimately, ADR plays a pivotal role in your property’s revenue management strategy.
What is the ADR formula?
The formula to calculate your average daily rate is:
Rooms revenue earned / Number of rooms sold.
Of course, when you are using this formula, you need to exclude any rooms that are complimentary or rooms that are currently being occupied by staff members.
How to use an ADR calculator
Even though the formula is a simple calculation, you don’t have to do the work yourself.
You can use our free calculator to quickly and easily calculate the ADR for your small hotel. You’ll be able to get an instant and accurate result that shows you the ADR of your property for the past 30 days.
Use this information to see if you’re hitting the targets you want to hit or if you need to make strategic adjustments to boost it up.
How to increase ADR in your hotel
To increase your ADR, you must focus on increasing your revenue per customer by implementing pricing strategies.
Here’s a list of eight ways to help increase your hotel’s ADR:
1. Create more demand in peak season
Scarcity is one of the main drivers justifying higher daily rates. Increase your bookings by finding more customers better matching the unique experience you offer. You can do this by adding more online travel agents (OTA’s) through a channel manager. It’s simple to implement and a cost effective way to better manage your online advertising.
2. Price your rooms by attributes
Rooms with an extra special view or spectacular amenities can attract higher daily rates than your other rooms. Set your daily rates accordingly to reflect the value your guests put on these things.
3. Utilise packages and extras
Persuade your hotel guests to spend a little more through your online booking engine by adding carefully thought-out extras such as a romantic package or champagne breakfast.
Our top picks of extras to offer include:
- Airport shuttle
- Product packs
- Local art
This is simply about letting your guests know what options are available to them. If it’s out of sight, it’s out of mind!
4. Offer events and tours
Use your front desk or other designated area to take advantage of point-of-sale opportunities such as car rental or tickets to events and tours. Adding this extra value to guests not only brings in revenue but also provides a better traveller experience.
5. Make your own products available for purchase
Whatever the product may be, give guests something to remember their time with you and add a new revenue stream by making some of your products available for purchase. For example, sunscreens, shampoos or even towels for the beach. Add a payment portal to seamlessly manage payments alongside your room booking payments.
6. Encourage referrals
Satisfied customers should be encouraged to refer their friends and family to stay at your property. Offer your potential guests incentives such as a promotion code, which you can easily set up in your all-in-one booking management solution to be redeemed at the time of booking on your website.
A post-stay email can also be set up to automatically send to your guests after they leave, with a specific promotion code and discount. Remember: Word of mouth is often the most powerful marketing tool.
7. Offer discounts for extended stays
Some guests are quite flexible with their travel schedule and might want to stay an extra night or two. Offering a 50% discount off an additional night, when paying the regular rate for the first few nights, could ensure a higher occupancy and incremental revenue.
8. Consider welcoming pets
You may not warm to pets, but many travellers would love to travel with their furry companions. If possible, make your small hotel pet-friendly so you not only attract a different segment of travel customers, but can be in a position to charge a little extra for your rooms.
Boosting ADR with hotel software
The simplest way to action all of the above is with an all-in-one solution that allows you to seamlessly control your front desk, manage your room availability across all global booking websites, handle payments, direct reservations and remote management via a mobile app. Little Hotelier does all this… and more!
Take a free trial today or watch a demo to learn more!