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How do I calculate ARR and ADR?

1 0

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)