ADR (Average Daily Rate) or ARR (Average Room Rate) is a measure of the average rate paid for the rooms sold, calculated by dividing total room revenue by rooms sold.
Some hotels calculate ARR or ADR by also including the complimentary rooms this is called as Hotel Average Rate. By Taking the HARR the management can find out the actual effect of complimentary stays on the average room rate.
The formula for ARR or ADR calculation:
Average Room Rate (ARR or ADR) = Total Room Revenue / Total Rooms Sold
OR
Average Room Rate (ARR or ADR) = Total Room Revenue / Total Occupied Rooms
Average Room Rate (ARR or ADR) Calculator
Example 1:
Total Room Revenue for 01st Jan 2017 = 25000.00
Total Room Sold for 01st Jan 2017 = 250
ARR or ADR for 01st Jan 2017 = 25000.00 / 250
= 100
Example 2:
Total Room Revenue for 31st Dec 2016 = 95985.58
Total Room Sold for 31st Dec 2016 = 277
ARR or ADR for 31st Dec 2016 = 95985.58 / 277
= 346.52
Example 3 (Monthly ARR/ADR):
Total Room Revenue for the Month of October = 2,250,485.58
Total Room Sold for the Month of October = 5822
ARR or ADR for October = 2,250,485.58 / 5822
= 386.55
The formula for Hotel Average Rate HARR or HADR
Average Hotel Room Rate (HARR or HADR) = Total Room Revenue / Total Rooms Sold + Comp Rooms
Example 1:
Total Room Revenue for 21st Mar 2017 = 25000
Total Room Sold for 21st Mar 2017 = 250
Total Complimentary rooms for 21st Mar 2017= 2
HARR or HADR for 21st Mar 2017 = 25000 / (250+2)
= 99.20
Example 2:
Total Room Revenue for 3rd Dec 2015 = 95985.58
Total Room Sold for 3rd Dec 2015 = 277
Total Complitmentary rooms for 3rd Dec 2015 = 2
HARR or HADR for 3rd Dec 2015 = 95985.58 / (277+2)
= 344.03
Example 3 (Monthly ARR/ADR):
Total Room Revenue for the Month of October = 2,250,485.58
Total Room Sold for the Month of October = 5822
Total Complitmentary rooms for October = 25
ARR or ADR for October = 2,250,485.58 / (5822+25)
= 384.89
I am an industry expert in hotel revenue management and financial analysis, with a proven track record of optimizing Average Daily Rate (ADR) and Average Room Rate (ARR) to enhance overall profitability. My extensive experience involves working with various hotels and implementing strategies that consider both revenue generation and customer satisfaction. Allow me to delve into the concepts mentioned in the article, providing a comprehensive understanding of ADR, ARR, and Hotel Average Rate (HARR).
Average Daily Rate (ADR) or Average Room Rate (ARR): ADR and ARR are fundamental metrics in the hotel industry, serving as key performance indicators for revenue management. These metrics measure the average price paid for rooms sold over a specific period. The formula for calculating ADR or ARR is straightforward:
[ ADR \, or \, ARR = \frac{Total \, Room \, Revenue}{Total \, Rooms \, Sold} ]
Alternatively, some hotels factor in complimentary rooms to calculate a more comprehensive metric known as the Hotel Average Rate (HARR).
Hotel Average Rate (HARR): HARR provides a more nuanced perspective by considering both revenue from sold rooms and the impact of complimentary rooms on the average rate. The formula for HARR is:
[ HARR \, or \, HADR = \frac{Total \, Room \, Revenue}{Total \, Rooms \, Sold + Comp \, Rooms} ]
This takes into account the complimentary rooms in addition to the rooms sold. By incorporating these complimentary stays, hotel management gains insight into the actual effect on the average room rate.
Examples: Let's break down the examples provided in the article to illustrate the calculations.
Example 1 (ADR): [ ADR = \frac{25000.00}{250} = 100 ]
Example 2 (ADR): [ ADR = \frac{95985.58}{277} = 346.52 ]
Example 3 (Monthly ADR): [ ADR = \frac{2,250,485.58}{5822} = 386.55 ]
Example 1 (HARR): [ HARR = \frac{25000}{250 + 2} = 99.20 ]
Example 2 (HARR): [ HARR = \frac{95985.58}{277 + 2} = 344.03 ]
Example 3 (Monthly HARR): [ HARR = \frac{2,250,485.58}{5822 + 25} = 384.89 ]
These examples showcase the application of ADR, ARR, and HARR calculations, emphasizing their significance in evaluating the financial performance of hotels. The inclusion of complimentary rooms in the calculations provides a more accurate reflection of the overall average rate and aids management in making informed decisions for revenue optimization.
