What is the Average Daily Rate (ADR) in hotel management?

The Average Daily Rate (ADR) is a key performance metric in hotel management that measures the average revenue generated per sold room. It is computed by dividing the total room revenue by the number of rooms sold during a specific period. This metric provides insight into how well a hotel is performing financially, reflecting pricing strategies and market demand. By focusing on the revenue generated from guest room sales rather than the overall occupancy, ADR helps hotel managers assess their pricing effectiveness and identify trends that may need to be addressed to maximize revenue.

In contrast, the other choices do not accurately represent the definition of ADR. The average revenue generated per guest does not specify that it pertains to room revenue specifically. The total number of rooms occupied simply reflects occupancy levels, and the total expenses divided by occupancy rate does not relate to revenue measurement in the context of ADR. Understanding ADR is crucial for hotel operators as it aids in budgeting, forecasting, and strategic planning in the hospitality industry.