What is average daily rate (ADR) for hotels?
ADR is the average price a hotel gets for each room it sells. This cheat sheet covers how to think about it, the math and where people get it wrong. The detail is further down.
How to think about it
- It's the average price of a sold room. ADR divides room revenue by rooms sold. It measures average room price and helps judge pricing levels.
- Empty rooms don't count. ADR says nothing about how full a hotel is. That's occupancy, rooms sold divided by rooms available, and RevPAR combines the two.
- It sets federal per diem. Since fiscal year 2005, GSA has based lodging per diem rates on ADR data, less 5%, from mid-range hotels in each market.
- Seasons show up in ADR. GSA sets seasonal per diem rates where ADR runs at least 15% different for two months or more.
The math
ADR = room revenue / rooms sold
A hotel earns $24,000 in room revenue from 160 rooms sold in one night. $24,000 / 160.
$150
Illustrative example. The formula is the one GSA and Marriott's annual report use.
Where people get it wrong
- Treating per diem as the market price. GSA says property selection, the data time frame and seasonality can make federal lodging per diem rates differ from published market rates.
- Mixing up ADR and average room rate. Average room rate is similar, but its calculation can vary with how a hotel reports discounts or free rooms.
- Reading one number for the whole year. In markets with seasons, ADR can swing by 15% or more between periods.
ADR vs. occupancy vs. RevPAR
| Metric | What it measures | How it's calculated |
|---|---|---|
| Average daily rate (ADR) | Average room price | Room revenue / rooms sold |
| Occupancy | How much of the hotel's capacity is used | Rooms sold / rooms available |
| RevPAR | Room revenue across every available room | Room revenue / rooms available |
How it works on Engine
Engine travel policies can set flat or tiered nightly rate caps and location-based rate limits, and a room above the cap can be blocked, allowed with a reason or allowed with approval. On the hotel side, Partner Hub Insights+ gives properties Engine market data on revenue, room nights and ADR, segmented by industry, company size and travel spend.
Questions
How do you calculate average daily rate?
Divide room revenue by the number of rooms sold for the same period. A hotel with $24,000 in room revenue from 160 rooms sold has an ADR of $150.
What is the difference between ADR and RevPAR?
ADR divides room revenue by rooms sold. RevPAR divides room revenue by all rooms available, so it reflects both price and how full the hotel is.
How does GSA use ADR to set per diem rates?
GSA collects ADR data from properties that meet its criteria, including fire-safe certification, and aims for mid-range hotels in each market. It typically uses data from the trailing April through March and sets lodging rates at ADR less 5%.
Is ADR the same as average room rate?
Close, but not always. Average room rate is the average price paid for each room sold, and its calculation can vary with how a hotel reports discounts or free rooms.
Sources
- U.S. General Services Administration, Factors influencing lodging rates, accessed November 2, 2026.
- U.S. General Services Administration, Frequently asked questions, per diem, accessed November 2, 2026.
- U.S. Securities and Exchange Commission, Marriott International, Inc. Form 10-K for fiscal year 2025, accessed November 2, 2026.
- Engine, Hotel abbreviations list: Guide to hospitality terms, accessed November 2, 2026.
- Engine, Company Travel Policy Enforcement, accessed November 2, 2026.
- Engine, Increase revenue, accessed November 2, 2026.