ADR (Average Daily Rate)
The mean revenue earned per night actually booked, calculated by dividing total rental revenue by total booked nights. Excludes cleaning fees and platform charges.
Definition
What is ADR (Average Daily Rate)?
Average Daily Rate (ADR) is the mean revenue earned per night actually booked, calculated by dividing total room rental revenue by the total number of booked nights in a given period. ADR excludes cleaning fees, OTA service fees, and other guest charges — it reflects only the nightly rate guests paid for occupancy. When Chalet displays market ADR data, it represents the true blended average across all active listings, not the listed asking price (which is always higher).
ADR is one of the three core STR performance metrics alongside occupancy rate and RevPAR. It captures pricing power: the higher your ADR relative to competitors, the stronger your property's market position. STR hosts improve ADR through dynamic pricing tools, premium amenities (hot tub, pool, game room, EV charger), professional photography, high review scores, and differentiated positioning. Markets with high ADR but lower occupancy tend to be luxury or experience-focused destinations with price-inelastic demand.
When analyzing a market for investment, ADR serves as the primary input into revenue projections. Combined with occupancy rate, ADR determines RevPAR. For investors building financial models, conservative ADR assumptions — using the market median, not the top-performer ADR — consistently produce more reliable projections. Chalet's STR calculator uses market ADR data pulled for the specific address to automatically populate revenue estimates.
Formula
ADR = Total Rental Revenue ÷ Number of Booked Nights
Real-world example
Scenario
A lakefront property in Lake Tahoe earns $32,400 across 108 booked nights in a year.
Calculation
ADR = $32,400 ÷ 108 = $300 per night.
Result
At the market median of $265, this property commands a $35/night premium — likely due to direct waterfront access and premium furnishings. That $35 premium, held across all 108 booked nights, adds $3,780 in revenue versus a median-performing comparable.
Why it matters for STR investors
ADR is the foundation of every STR revenue model. Getting it right — using real market data rather than optimistic assumptions — is the difference between a deal that works on paper and one that works in practice. Overestimating ADR by $30/night on a 200-night-occupied property inflates projected revenue by $6,000/year, which could turn a cash-flowing investment into one that doesn't.
Key points
- ADR = Total revenue ÷ booked nights (not available nights)
- Excludes cleaning fees, service fees, and pass-through charges
- Reflects the actual earned rate, not the listed asking price
- High ADR without context is meaningless — always pair with occupancy for RevPAR
- Seasonal ADR swings of 2–3x between peak and off-peak are common in leisure markets
- Dynamic pricing tools (PriceLabs, Wheelhouse) are the fastest way to improve ADR
Chalet tools
