What Does ADR Mean in Real Estate?

What Does ADR Mean in Real Estate?

ADR stands for "Average Daily Rate." It is a metric commonly used in the hospitality industry, particularly for short-term rentals, hotels, and vacation properties. ADR represents the average income earned per rented room or unit per day. This metric helps property managers, owners, and investors understand the revenue performance of their rental properties.

To calculate ADR, you can use the following formula:

ADR = Total Room Revenue / Number of Rooms Sold

Here's a breakdown of the components:

• Total Room Revenue: The total income generated from renting out rooms or units over a specific period.
• Number of Rooms Sold: The total number of rooms or units that were rented out during the same period.

Tracking ADR helps property owners assess their pricing strategies, compare performance against competitors, and make informed pricing decisions to maximize profitability.