The formula for Average Daily Rate (ADR) in the hospitality industry is calculated by dividing the Total Room Revenue by the Number of Rooms Sold. For example, if a hotel generates $20,000 in gross revenue from room rentals on a specific night and has sold 100 rooms, the ADR for that day would be $200. It is a critical Key Performance Indicator (KPI) used by hotel managers and owners to measure the financial performance of a property and compare it against competitors. It is important to note that the calculation only includes revenue from the actual room stay and does not factor in other income sources like room service, spa treatments, or parking fees. Additionally, the denominator only includes "sold" rooms, meaning vacant rooms are excluded from this specific metric. ADR is often used alongside "Occupancy Rate" and "RevPAR" (Revenue Per Available Room) to provide a complete picture of a hotel's profitability and pricing strategy.