What Is Average Daily Rate (ADR) in Vacation Rentals?
Aloha, it’s Henry! When it comes to vacation rental success, there are three key numbers to track — and ADR is the first one I teach buyers and owners. ADR stands for Average Daily Rate, and it tells you how much you’re earning per booked night. Simple to calculate. Powerful when you track it.
But here’s the thing most people miss: ADR is a result, not a setting. You don’t “set” your ADR — you earn it based on how well your pricing strategy and occupancy rate work together.
🎥 Watch: ADR Explained in 60 Seconds
What is ADR (Average Daily Rate) for Vacation Rentals?
Average Daily Rate (ADR) is a key metric that tells you how much income, on average, you earn for each night your vacation rental is actually booked—not just available, but occupied by a guest. ADR is calculated by dividing your total rental revenue by the number of nights booked (also called “nights sold”). This makes it a key performance indicator that reflects how your pricing and occupancy strategies work together.
Because most hosts use dynamic pricing tools, your nightly rates will vary throughout the month—some nights may book for more, others for less. ADR smooths out these fluctuations into a single, easy-to-track average, giving you a clear picture of your property’s earning power over time.
Example Calculation (from the video):
If your vacation rental earns $9,000 from 30 booked nights, your ADR is $300 ($9,000 ÷ 30). This is simple, easy math — and a great starting point for understanding the concept.
Additional Example #1:
Say your rental earns $7,200 in a month, and you’re booked for 24 nights. Your ADR would be $300 ($7,200 ÷ 24). This means that across all the nights your place was booked, you earned $300 on average — regardless of whether some nights were $275 and others were $350.
Additional Example #2:
If your ADR is $325 and you had 20 booked nights, your monthly revenue would be $6,500 (20 × $325). This reverse math is helpful when forecasting income or reviewing performance.
Why Track ADR?
ADR gives you a quick read on your rental’s earning power when it’s booked. If your ADR is rising, it could mean your pricing, photos, or reviews are attracting higher-paying guests. If it’s falling, it may be time to review your strategy, rework your listing, or check for increased competition. It also helps you compare your property to others or decide if it’s time to adjust rates.
Limitations:
ADR only considers nights when your property is booked — it doesn’t account for empty nights. So while it’s great for understanding pricing performance, it doesn’t tell the full revenue story. That’s where RevPAR (Revenue Per Available Rental Night) comes in. RevPAR combines ADR with occupancy to give you a clearer view of how much your rental is actually earning over time. For example, if your ADR is $320 and your occupancy rate is 75%, your RevPAR would be $240.
Bottom Line:
ADR is a simple but powerful tool for understanding your vacation rental’s income potential. It helps you track how pricing and occupancy work together, and it’s one of the first numbers I look at when helping clients evaluate a property or improve performance.
If you want to analyze your property’s numbers or explore buying a vacation rental, book a call with me. We’ll review your property type, occupancy, ADR, seasonality, and strategy to help you make the most of your investment.
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Schedule a quick call — whether you’re buying, selling, or just curious. I’ll share what I know, answer your questions, and help you move forward with confidence.