Average Daily Rate (ADR)
Average Daily Rate (ADR) is the average rental income you earn per booked night. For vacation rentals and short-term rentals, ADR shows what guests paid on average for each night that was actually booked (it does not include unbooked nights).
Quick Answer
ADR tells you your average nightly earnings from booked nights. Hosts use ADR to price confidently across weekends, holidays, and the shoulder season, and to compare performance against similar listings.
How to Calculate ADR
The formula is straightforward:
ADR = Total Rental Revenue ÷ Number of Booked Days & Nights
Example: If your property earns $15,000 from 150 booked nights, your ADR is $100.
Why ADR Matters for Hosts
- Understand whether your rental rate is aligned with demand.
- Track revenue performance alongside occupancy rate.
- Improve pricing decisions with yield management.
- Forecast earnings using potential annual revenue and recent results from the last twelve months.
Traveler Personas: ADR Examples Hosts Can Use
Different guest types respond to different price anchors. Use ADR as a baseline, then adjust based on stay pattern, timing, and seasonality.
Destination Vacation Guests (Families and Groups)
Travelers planning a destination vacation often book longer stays and care about value across the full trip. Watch your average length of stay and consider a weekly rental structure if it improves conversions without lowering total revenue.
- Example pricing insight: If your ADR is $240 but most family bookings are 7 nights, a small weekly discount may raise booked nights and keep revenue stable when paired with strong occupancy rate.
- Operational note: Longer stays can reduce turnover gaps and increase revenue per available night.
Free Independent Travelers (FIT) and Weekend Getaway Couples
A free independent traveler typically shops short breaks and compares options quickly. ADR helps you sanity-check whether your weekend pricing is too low (leaving money on the table) or too high (reducing bookings).
- Example calculation: $3,600 across 12 booked nights (mostly Fri–Sun) equals a $300 ADR. If demand is strong, consider targeted yield management rather than raising every date.
- Timing tip: FIT demand often has shorter booking lead time, which can support higher last-minute prices.
Mid-Term Rental Guests (Remote Workers, Relocators, Insurance Stays)
Guests booking a mid-term rental (typically 30+ days) prioritize predictable monthly cost. ADR still matters because it reveals your effective nightly earnings once a longer stay is booked.
- Example calculation: $4,500 over 30 booked nights equals a $150 ADR. If that fills low-demand dates, you may improve total gross booking revenue even with a lower nightly rate than peak weekends.
- Availability tip: Keep your calendar accurate to avoid double booking and to manage blocked days & nights during changeovers.
Seasonal Value Seekers (Shoulder Season Travelers)
Value-focused travelers target the shoulder season for better deals. Track ADR by rental season so you can offer compelling rates without underpricing peak demand.
- Example insight: If summer ADR is $325 but shoulder season ADR drops to $190 with many open nights, a modest price adjustment plus improved marketing can raise occupancy rate and stabilize revenue.
Factors That Influence ADR
- Seasonality and rental season patterns.
- Length of stay, tracked through average length of stay.
- Demand timing, reflected in booking lead time.
- Your baseline daily rate strategy and any dynamic adjustments.
- Market signals from vacation rental data and local competition.
Limitations of ADR
- ADR alone can look strong even when occupancy rate is weak.
- ADR does not describe availability constraints caused by blocked days & nights.
- ADR is best interpreted with performance measures like revenue per available night.
Host Playbook: What to Track With ADR
- ADR + occupancy rate to understand pricing versus demand.
- ADR by rental season to avoid over-discounting.
- ADR by persona: short stays (FIT) vs. weekly rental vs. mid-term rental.
- ADR trends across the last twelve months to spot shifts early.
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