What is the difference between ARR and ADR?
ARR stands for average room rate while ADR stands for average daily rate. ARR and ADR are the same when looking at a single day, but they differ when looking at a period total. ARR is used within PMI as it is more relevant when looking at a longer period of time. Using ARR gives a better view of the period, as otherwise, days with low room nights will skew the period result.
- ARR is the sum of all revenue during the period, divided by the total number of rooms sold for the period.
- ADR is the average of each day’s ARR/ADR for the period.
Please see the chart below for more details.
Example – One week of actuals:
|
Room nights sold |
Room revenue |
Average (ADR/ARR) |
|
|
Monday |
75 |
75,000 |
1,000 |
|
Tuesday |
100 |
120,000 |
1,200 |
|
Wednesday |
100 |
120,000 |
1,200 |
|
Thursday |
85 |
93,500 |
1,100 |
|
Friday |
60 |
48,000 |
800 |
|
Saturday |
80 |
72,000 |
900 |
|
Sunday |
10 |
4,500 |
450 |
|
Total |
510 |
533,000 |
|
|
ARR: |
1,045 |
= 533,000 divided by 510 |
|
|
ADR: |
950 |
= 1000+1200+1200+1100+800+900+450 divided by 7 (days) |
|