The Average Daily Rate or the ADR in the hotel industry is often a primary concern for most hotel owners. However, in today’s times, every hotel owner including independent hoteliers can definitely improve the ADR using simple tactics to lend a boost to profits. A hotel’s occupancy rates are often a source of worry for hoteliers who need to constantly reinvent their revenue management strategies to work around a hotel’s ADR.
Let’s first get a firm understanding on a hotel’s average daily rate and why a hotel’s room occupancy rate should not be a cause of worry for hotel owners.
What is ADR in the hotel industry?
The Average Daily Rate, also known as ADR is a term popular amongst hoteliers and it acts as a strong indicator of a hotel’s performance and profits. The ADR helps one determine the average rate of the rooms sold over a specific period of time. This duration can refer to a quarter, a 30-day period or even a year. A hotel’s average daily rate gives an indication of the overall income generated from every paid and occupied room for that particular duration as calculated by the hotel owner.
ADR in the hotel industry is calculated by dividing the room revenue by the number of rooms sold i.e,
ADR = Room revenue ÷ Rooms sold
ADR revenue management requires application of certain tactics. Independent hotel owners can certainly learn how to maximize hotel revenue using the following tips.
How to Increase ADR for Independent Hotels using these 5 Tips
You need to have your pricing strategies in place to increase hotel revenue from your average daily room rate.
A good combination of the handy tips mentioned below should help you achieve your goals in the New Year and optimize ADR for your hotel property.
Package it Right
If you’re looking to increase hotel revenue, create attractive packages that should tempt the guest into getting more for less. Have an in-house dining area? Offer a complimentary breakfast option. Your basic package must include an add-on, one that adds value to your guests’ stay. Define packages as per the season, or the type of guests your independent hotel caters to. Is there an event in the city? Offer free tickets at the time of booking to increase your revenue per customer. Your guests might be seeking travel arrangements from the airport and back. Add these to your package to create a final deal that attracts and retains guests to your hotel brand. Gently nudge your guests to spend a little more to increase your ADR.
Understand Online Reputation Management
The Internet plays a massive role in influencing a travelers’ decision towards booking your room online. Review sites and social media channels are often perused before the final booking is completed. The online reputation of independent hotels matters as guest often turn to read what previous visitors have to say. By improving your guest satisfaction levels, you can easily work on your brand’s online reputation management. A healthy reputation online will help to increase your revenue and ADR. Encourage guests to share feedback online, get more referrals, offer online promo codes and more to maintain a consistent level in your hotel occupancy.
“Lower rates than the competitors equals to higher revenue for every available room” – this is actually a popular belief in the hotel industry. Quite contrary to this belief, a 10-year study of 4,000 hotels in Europe reveal a different fact as mentioned in a report online. Hotel owners who had priced their hotel rooms higher than their direct competitors generated higher revenue per available room. What does this mean?
ADR is what drives RevPar and certainly not room occupancy as a sole factor. A high occupancy should not be considered as the only parameter that optimizes ADR. Instead, you can use your occupancy reports to create a well-defined revenue management strategy for better profits without focusing only on your hotel’s occupancy levels. If the guest satisfaction levels are higher for your independent hotel, you might consider a room rent increase!
So, it pays to watch what your competitors are doing without adhering to the common belief of lowering room rates to increase your revenue and fill rooms quickly. Position your brand as a premium property, and offer value for the price you charge. Ensure your hotel’s operations are streamlined with the appropriate use of technology to turn the focus entirely on guest satisfaction.
Personalize your Service, Build Relationships
You can improve a hotel’s room occupancy rate with the help of technology. As mentioned earlier, enhancing guest experience should be your prime focus and personalization gets you there faster. Use cloud-based property management system like Hotelogix capable of capturing and storing guest data, understand their preferences and more. Focus on building relationships not only with your guests, but also with your partners and operators. Ensuring a guests’ requests are carried out even before his/her arrival ensures you will score more points for guest satisfaction. Use data to know your guest, target your message according to the requirements, regions or purpose of journey.
Offer Great Discounts for Extended Stays
Regular guests as well as those arriving for the first time at your hotel property can be drawn towards extending their stays if you offer lucrative discounts. This is particularly beneficial for leisure travelers or backpackers seeking to explore the region on a budget stay. For example: you can fix a certain percentage as discount for the third night at your hotel property. In this manner, you lend a boost to your revenue per customer as well as aide in increasing the occupancy for your hotel property.
The Average Daily Rate or the ADR is certainly the most important factor that determines your hotel’s success rate. We hope you’ve found our ADR management tips useful. Have thoughts to share on your hotel’s occupancy rates? Do share your comments below.
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