Thinking of buying a hotel? Do you know your eWOM from your RevPAR? The hotels industry is full of potentially baffling abbreviations and industry jargon; get to know the meaning behind the terms below and you can search for your ideal hospitality business with confidence.
In the hospitality industry, the ADR, or Average Daily Rate, is simply the total earnings from letting rooms on an average day. It doesn’t include earnings from the restaurant, bar, or any other hotel facilities; it also doesn’t include unoccupied letting rooms. For instance, if you have a 10-bedroom hotel that earns £800 a night and only 8 rooms are occupied on an average night, your ADR will be £100 (£800 divided by 8 occupied rooms) rather than £80 (£800 divided by 10 total rooms).
The ADR is particularly helpful when trying to determine the likely earnings of your hotel once you take it over, and will give you a sense of where the hotel sits in the local market.