Encyclopedia
Average daily rate (ADR)
Room or site revenue divided by occupied rooms or sites. Hotels and campgrounds use it to compare pricing over time.
For example: A campground owner tracks average daily rate by month to see whether shoulder-season pricing is working. (Illustration only, not a real deal.)
This is a general industry term with no single official definition. Your lease or contract wording controls.
Example only, not a real client. Say you are evaluating a small motel. Its average daily rate shows what guests typically pay per occupied room. Comparing that with occupancy gives you a picture of revenue.
What I’d tell a friend
Look at average daily rate alongside occupancy, not on its own.
Why it matters to you
For hotels, campgrounds and similar businesses, it's one of the main drivers of revenue and value. A buyer who only looks at occupancy can miss that the business is filling its sites at lower rates than it used to.
How to use it in your deal
Buyers of hospitality properties should review ADR alongside occupancy and revenue per available room, since a high ADR with low occupancy may not be good. Look at ADR by month to see seasonality, and compare with similar properties nearby. Check whether reported ADR includes taxes, fees or packages. Ask for source records, like booking system reports, rather than summaries.
Owners can use ADR to set pricing and judge how they're doing against competitors. Lenders look at ADR trends when underwriting. For campgrounds, separate nightly, seasonal and long-stay sites, since each has a different rate pattern and different legal rules. Also check provincial hotel tax and municipal accommodation tax handling, which affects reported revenue.
When comparing ADR across years, adjust for renovations, new rooms or changes in booking channels; a jump might come from one big event rather than a lasting trend. Ask for three years of data if you can get it.
Mistakes I see
Looking at ADR alone. Ignoring seasonality. Trusting summaries.
In BC and Vancouver
Provincial sales tax on accommodation and the municipal and regional district tax apply; check with the province.
Official sources: Provincial sales tax (Government of BC) · PST bulletins and publications (Government of BC)
What it is
Average daily rate is room revenue divided by rooms sold for a period.
It is used in hotels, motels and some campgrounds.
Using it
Compare it with similar properties and seasons.
Check whether rates are sustainable and what drives them, such as events or seasonal tourism.
Ask for monthly figures over several years to see trends.
Questions to ask before you sign
- What's ADR by month?
- What's occupancy?
- Does it include taxes?
- How does it compare?
Keep reading
Related terms: Price per site, Seasonal campground
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General information for British Columbia only. It isn’t legal, tax, accounting or financial advice, laws and rates change, and reading it doesn’t make you my client. Any numbers or scenarios are hypothetical. Check the linked official source and talk to a lawyer, accountant or other qualified professional before you act or sign anything. See the terms and disclaimer.