Average Room Rate
(ARR) Meaning
The Average Room Rate (ARR) is one of the most important metrics in the hotel industry. It shows the average price guests pay per occupied room and helps you understand your revenue strategy.
What Is Average Room Rate (ARR)?
Average Room Rate (ARR) is the average income earned per sold room, excluding empty rooms. It answers the question:
“On average, how much do guests pay for a room?”
This metric is used by:
How to Calculate ARR
Example:
- Total room revenue: €2,800
- Rooms sold: 20
ARR = €2,800 ÷ 20 = €140
This means the average guest paid €140 per night.
ARR vs ADR – Are They the Same?
Yes
ARR (Average Room Rate) and ADR (Average Daily Rate) mean the same thing in most hospitality systems.
Both measure the average price of sold rooms. Some hotels prefer “ADR,” while smaller properties or older systems often use “ARR.”
Why ARR Matters for Hotels and Rentals
Pricing Correctness
If your ARR is too low vs competitors, you leave money on the table. If too high and occupancy drops, you might be overpriced.
Revenue Forecasting
ARR helps predict monthly revenue, seasonal performance, and overall profitability.
Promotion Success
Shows whether discounts or campaigns are actually improving total revenue, not just occupancy.
Smarter Distribution
Different channels (Booking.com, Airbnb, direct) affect your ARR differently. Tracking helps balance them wisely.
ARR Example in Real Life
Hotel Example
- 50 rooms total
- 35 rooms sold tonight
- Total revenue: €3,850
Vacation Rental Example
- 5 apartments
- 3 booked tonight
- Total revenue: €330
The formula works for any type of accommodation.
How NOBEDS Helps Track ARR Automatically
You don’t need spreadsheets — ARR updates instantly with every booking in the NOBEDS PMS.
Increase Your ARR Today
Use smart pricing tools and demand-based recommendations to earn more revenue per room without extra work.
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