How is the average daily rate (ADR) calculated?

The average daily rate (ADR) is a key metric in the hospitality industry used to assess the average revenue generated per occupied room. It is calculated by taking the total room revenue and dividing it by the number of rooms sold. This formula reflects the income derived from rooms that have been occupied, providing insight into pricing strategies and overall revenue performance.

The correct calculation, total room revenue divided by rooms sold, indicates how much income is made on average for each room that is actually utilized by guests. This measure is essential for hotel management and investors as it helps to gauge the effectiveness of pricing, demand, and sales strategies.

The other options do not accurately represent the calculation of ADR. Total Rooms divided by Rooms Sold would yield a ratio that does not relate to revenue and instead provides a measure of occupancy or utilization. Similarly, Total Rooms Available divided by Total Nights does not pertain to revenue but rather to room availability. Finally, calculating Rooms Sold divided by Total Sales does not inform on room revenue but rather gives unrelated sales data. Thus, only the calculation of Total Room Revenue ÷ Rooms Sold accurately represents how ADR is determined.