Average Daily Rate (ADR) is an important figure in the hospitality industry, as it provides a measure of the daily revenue earned per occupied room in a lodging business. It is calculated by dividing total room revenue for a given period (typically one month) by the number of nights sold during that period. By providing a simple metric to measure performance, the ADR serves as a vital tool for hotel managers to evaluate their business and compare against industry standards.

Businesses can influence the ADR to accommodate their expected profits. Increasing occupancy or the amount of rooms sold is the most effective way to increase it, as it helps the cost per night to decrease. Furthermore, hotels can also increase their ADR through price and promotions management. Hotels are able to increase the per night costs by changing the pricing of their room options, applying different discounts, and through promotional campaigns aimed at attracting more customers.

The ADR is also an effective way to compare performance amongst different businesses. It enables managers to evaluate their business models as compared to market trends and competitors. In addition, it provides an insight into the approximate profit margins by combining the ADR with the occupancy rate. By multiplying these two stats, businesses can determine their revenue per available room (RevPAR), which gives a good estimation of potential becoming revenue.

To conclude, the average daily rate (ADR) is an important statistic in the hospitality industry that enables a business to compare its performance to competitors and to the industry in general. It is a key figure that businesses use to evaluate their business models and make strategic decisions, as well as to determine how much profit can be earned for a given period. By understanding the impact that price and promotional campaigns can have on the ADR, hotels and motels can maximize their profits by strategically increasing the rate.