Hotel Average Daily Rate (HADR) Calculator
Est. reading time: 3 min
Are you trying to find out what your Hotel Average Daily Rate is? Enter your revenue, the total number of rooms sold, and the number of free rooms that were in use, together with the number of days in the period you wish to measure, to find out.
The room rate calculator will tell you what your Hotel Average Daily Rate (HADR) was during a certain period.
Table of Contents
- Hotel Average Daily Rate (HADR) Definitions
- Examples of HADR calculation
- How to correctly interpret HADR numbers?
- A Note on Complimentary Rooms
Hotel Average Daily Rate (HADR) Definitions
Hotel Average Daily Rate
The Hotel Average Daily Rate (HADR) is the average revenue per occupied room per day during a period. It is calculated by dividing the total room revenue by the number of rooms that were occupied and the number of days in the period.
HADR is similar to the Average Daily Rate (ADR). The difference is that ADR calculations exclude free rooms such as complimentary rooms and rooms used by staff, while HADR also takes into account the effect that the free rooms have on the average daily rate.
HADR, together with ADR, is used to see the effect that free rooms (such as complimentary and house rooms) have on the daily income generated from room rental.
Total Revenue
The total revenue is the revenue earned by selling the rooms during the period for which the room rate is calculated.
# of Rooms Sold
Rooms that were occupied and paid during the period for which the room rate is calculated.
# of Free Rooms
Rooms that were occupied but not paid for. Rooms that were rented free of charge (complimentary rooms) and rooms used by staff are examples of free rooms.
# of Days
# of Days is the length of the period for which the daily rate is calculated, in days.
Period
Period refers to the period for which the HADR is calculated. Common periods are a week, a month, 30 days, or a year.
Why calculate HADR?
The Hotel Average Daily Rate (HADR) is often compared to the Average Daily Rate (ADR) to quantify the effect that free rooms have on the average daily rate. Free rooms are rooms such as complimentary rooms and rooms used by staff (house rooms).
When comparing your HADR to your ADR, make sure to use the values calculated for the same period. If you compare different periods, it's a little like comparing apples to pears, and any conclusions you draw might be misleading.
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Examples of HADR calculation
To calculate the Hotel Average Daily Rate (HADR), we can use the formula:
| HADR = | Revenue |
| (Paid Rooms + Free Rooms) · Days |
where Revenue is the total room revenue, Paid Rooms is the number of rooms that were occupied and paid for, Free Rooms is the number of complimentary and house rooms used, and Days is the number of days in the period for which the HADR is calculated.
Example 1: Hotel Average Daily Rate for a 30 Day Period
Your total room revenue during the last 30 days was $101700.00. 25 of your rooms were occupied by paying guests, and 2 of your rooms were occupied by complimentary stays. Then, you can calculate your hotel average room rate from:
| HADR = | $101700.00 |
| (25 + 2) · 30 |
which is equal to $125.56, and is $10.04 lower than if you had no complimentary stays.
Example 2: Average Daily Rate for a Week
Your room revenue for one week was $7861.00. You have 10 rooms that were occupied and paid for during that week and, 1 complimentary room. Then, your hotel average room rate is given by:
| HADR = | $7861.00 |
| (10 + 1) · 7 |
which is equal to $102.09, and is $10.21 lower than if you had no complimentary stays.
Example 3: Average Daily Rate for a Single Day
Similarly, for a single day with revenue of $700.00, and 5 occupied (and paid for) rooms, and 1 complimentary room, your hotel average room rate will be:
| HADR = | $700.00 |
| (5 + 1) · 1 |
which is equal to $116.67, and is $23.33 lower than if you had no complimentary stays.
How to correctly interpret HADR numbers?
HADR is often used in comparison with ADR, to see the effect that free rooms have on ADR. When trying to make sense of your HADR numbers, there are two things you should keep in mind:
- You should always compare HADR calculated for periods of equal length. Compare weeks to weeks, months to months, 30-day periods to 30-day periods, and so on...
- You should always compare HADR and ADR numbers for the same period. Otherwise, you risk making false conclusions.
A Note on Complimentary Rooms
Although free rooms like complimentary rooms and house rooms decrease your HADR, this doesn't automatically mean that they are bad for business: During slow periods, where a room would otherwise stay unoccupied, it might make good business sense to give it away as a complimentary room. You can do this to promote your business, boost guest satisfaction, or as a reward for guest referrals.
During high-demand periods the situation is different: The room could create a nice revenue for you. You have to offset the value you might get back by giving the room away for free, with the potential income you will lose by not renting it out for profit.
In summary, utilizing complimentary rooms as part of your marketing strategy might be a good idea, especially during slow seasons. Keep in mind that you should always take into account the potential revenue you might leave behind.