What is the formula to calculate the Average Daily Rate (ADR)?

The formula to calculate the Average Daily Rate (ADR) is indeed Total Room Revenue divided by Rooms Sold. This metric is vital in the hospitality industry as it provides insight into the revenue generated per available room that has actually been sold over a specific period.

By using this formula, you can determine how effectively a hotel is pricing its rooms and how much revenue it brings in from those sales. For example, if a hotel has an ADR of $150, it indicates that, on average, each room sold generated that amount in revenue, allowing hotel managers to assess performance and adjust pricing strategies accordingly.

Other options do not accurately represent the calculation method for ADR. Total Room Revenue divided by Rooms Available could mislead since it does not reflect only those rooms that were sold, thus failing to provide a proper average for revenue per sold room. Similarly, dividing Total Revenue by Total Rooms does not specifically account for only room-related income and could include other sources of revenue, hindering a clear assessment of room revenue performance. Lastly, Total Occupancy divided by Total Rooms does not yield any revenue-related figure, focusing instead on occupancy rates, which is a different metric altogether.