Little Hotelier Resource Hub

Handy business resources for small accommodation providers

How to Calculate My Small Hotel’s Average Daily Rate (ADR)

Posted in Revenue Management

The average daily rate of your small hotel is the average rental income of a paid and occupied room during a specific time period.

So why do you need to know what your ADR?

To develop an effective revenue management strategy, which in turn allows you to maximize your income during the peak times of the year and manage your assets during the quiet seasons.

How to Calculate Your Average Daily Rate

There is a simple formula that you can use in order to calculate your ADR:

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.

If using the formula isn’t your thing, you can use our free calculator to quickly and easily calculate the ADR for your small hotel.

Tips for Increasing Your ADR

The key to increasing your ADR is implementing pricing strategies that allow you to increase the revenue you generate from each individual guest.

Some ideas you may be able to use at your small hotel include:

Extended Stay Discounts

Offer discounts for guests who stay at your location for a longer period of time. For instance, many people stay at small hotels for the weekend.

You could encourage them to stay longer by offering 30% off of their third night. This increases your occupancy and boosts your revenue per customer.

Create Packages

Packages provide your guests with an opportunity to customize their stay, and you can enjoy a boost in revenue at the same time.

Romance packages that include wine and chocolates are a popular option.

You also might consider packages that incorporate airport transportation and tickets to a local event to complete their stay.

Other Metrics You Should Measure

In addition to increasing your ADR, you also should be looking at other metrics in order to boost your revenue and implement the right pricing strategies.

Booking channel data provides you with insight into the channels used by your guests and the amount of revenue generated by each type of channel.

Statistics reports allow you to evaluate the number of occupied rooms that you have, the revenue generated per room type and the number of cancellations that you have on a regular basis.

For more information on increasing revenue at your small hotel, watch our webinar now.

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