Average Daily Rate
Why it’s Important
Average Daily Rate is an essential metric for those in the Hotel and Hostel industries, which, along with Occupancy rates and REVPAR, is commonly viewed as a barometer of the business’ financial health. Your Daily Rate is the amount of revenue which you are generating per day, per occupied room. The higher this figure, the more you are earning. By measuring this as an average, periods of high and low occupancy are combined together in order to give a truer figure of how much money is being generated on a daily basis. Understanding this figure is essential in order to optimise financial performance.
Making the KPI
To calculate your Average Daily Rate you’ll need to know:
- Amount charged per occupied room
- Number of occupied rooms
- Days in Reporting Period
Once you’ve imported the necessary variables, you can calculate your Average Daily Rate by diving the amount charged per occupied room by the number of occupied rooms, and then the result by the number of days in your reporting period. The last division is unnecessary when calculating Average Daily Rate on a daily basis.