Average Daily Rate, or ADR, is calculated by dividing the income generated from a reservation by the number of days reserved in the booking, including the cleaning fee set by the host.

When determining the income for a short-term rental listing, we include the cleaning fee, as this can be a revenue stream for many hosts and property managers. To calculate the historical ADR, we divide the total revenue of the booking by the number of reserved days. We then factor in the cleaning fee by dividing it by the number of reserved days.

For example, if a property was booked for 5 days at $250 per night, and the cleaning fee for those 5 nights was $200, the ADR would be $290.

As we include the cleaning fees in the ADR, it is also included in the total revenue figures.

The ADR for specific properties shows the ADR over the last 12 months:

Whereas the ADR showing market performance will give you the monthly median average daily rate.

Historical vs. Future Data

AirDNA shows both historical and forward-looking data points, the cleaning fee is included in the historical figures but not in the forward-looking ones.

With historical data we can see cleaning fee information, which allows us to factor it into the average daily rate (ADR), and in turn revenue. With future-looking data, cleaning fees are too variable and subject to change to be reliably included in our figures.

The time of year can impact the ADR in a market. In ski town markets, for example, you’re likely to see an increase in the daily rate charged in the winter and a decrease in the summer, whereas, in beach markets, you’re likely to see the opposite due to higher demand and hosts being able to increase their rate and capitalize on an influx of guests to the market.

Although ADR provides valuable insight into how much other hosts charge in your market, it is not a sufficient indicator of overall performance and should not be managed in isolation. Looking at occupancy and the ADR is essential to understand a property’s or market’s performance. Take, for example, a vacation rental whose ADR increased month-over-month but occupancy dropped, resulting in lower total revenue.

Market seasonality and booking lead time indicators help property managers and hosts set more intuitive pricing by providing historical market RevPAR (Revenue Per Available Rental) and future market demand. Managing and analyzing ADR within the context of occupancy is the best approach for those seeking to gain an edge over the competition.