What does ADR stand for in hotel management contexts?

In hotel management, ADR refers to Average Daily Rate, which is a key performance metric used to assess a hotel's financial performance. It is calculated by taking the total room revenue generated during a specific period and dividing that by the total number of rooms sold during the same period. This measure provides insight into how much revenue, on average, each room generates on a daily basis, allowing hotel operators and managers to evaluate pricing strategies, understand market demand, and project future revenue.

Understanding ADR is crucial for hotel management, as it directly influences profitability. A higher ADR typically indicates that the hotel is able to charge more for its rooms, although it is essential to balance this with occupancy rates; if rooms are priced too high, occupancy may decrease, impacting overall revenue. Thus, managing and optimizing ADR is an important aspect of a hotel’s revenue management strategy.