ADR Calculator
What is the Average Daily Rate (ADR)?
Average Daily Rate (ADR) is a key performance indicator (KPI) in the hotel industry, providing valuable insight into hotel performance. ADR shows how much, on average, a hotel makes from each occupied room. It excludes complimentary rooms and those occupied by employees. (Source: Ehotelhub)
ADR Formula
The formula for calculating ADR is:
Total revenue from rooms ÷ Total number of rooms sold
For example, if your total revenue from room sales is $20,000 and you sold 200 rooms, the ADR calculation would be:
$20,000 ÷ 200 = $100
This results in an ADR of $100, which can be used as a financial benchmark. By adjusting your marketing, sales, and pricing strategies, you can aim to improve your ADR.
How to Calculate Your Property's Monthly and Yearly ADR
Monitoring ADR on a monthly or yearly basis is a useful practice to track your hotel's performance against financial goals. This allows for data-driven decisions to optimize revenue management strategies.
Why is Your Average Daily Rate Important?
ADR reveals the average amount your customers are willing to pay for a room. This figure is an indicator of the quality and value of your offerings. By comparing ADR to your operational costs, you can get a clear picture of your hotel's financial health.
Source: Ehotelhub
RevPAR Calculator
What is Revenue per Available Room (RevPAR)?
Revenue per Available Room (RevPAR) refers to the average amount of income generated from each room in your hotel. It’s a key performance indicator (KPI) commonly used in the hospitality industry to measure your business’s hotel room revenue.
You can calculate the RevPAR index based on room sales for a specific night or for a different period, like a month or year. Based on your hotel's RevPAR, you can assess whether your rates are filling rooms or if there’s a potential pricing issue.
RevPAR Formula: How and When to Calculate RevPAR
The formula for calculating RevPAR is straightforward:
Average daily rate (ADR) x Occupancy rate
Alternatively, you can calculate RevPAR using the following formula:
Total revenue generated ÷ Total number of available rooms
For example, if your total revenue for the night is $1500 and you have 20 rooms available, the calculation would be:
$1500 ÷ 20 = $75
This results in a RevPAR of $75. This metric allows you to better understand your hotel's financial performance and pricing strategy.
Why is RevPAR Important?
RevPAR provides valuable insight into your hotel's financial health by taking both the occupancy rate and ADR into account. A higher RevPAR suggests your marketing and pricing strategies are working effectively. It helps you evaluate the success of your pricing strategy in relation to occupancy.
RevPAR Limitations
While RevPAR is a useful metric, it doesn’t give you the full picture. It doesn’t account for operating expenses or profits from other revenue streams, such as your restaurant or bar. Therefore, it's important to combine RevPAR with other KPIs, such as GOPPAR and TrevPAR, to get a more comprehensive view of your financial situation.
Source: EhotelHub
How to Improve Your Property’s RevPAR
Optimizing your RevPAR can significantly improve your hotel’s revenue. Here are three ways to boost your RevPAR:
- Adjust your pricing strategy based on market trends and competitor rates.
- Introduce a minimum length of stay during high-demand periods.
- Reduce cancellations through better booking management and incentives.