Apr 13, 2021 | Revenue Management | Reading Time: 5 minutes
ADR is probably a term that you’re more than familiar with as a hotelier. Also known as the average daily rate, it is a metric that denotes the average realized room rental each day. Taking note of it in your financial statements or records can help you keep track of your current performance as well as adjust your pricing towards a more optimum rate per season.
It also plays a critical role in your hotel’s revenue. Smart business owners will even find it as a viable solution to get out of the debt cycle.
We’re going to talk more about the benefits of a high ADR later on. In the meantime, we’ll be sharing with you the methods on how to increase it first.
1. Offer Packages and Other Perks
Guests have different tastes, but they do have something in common: they all enjoy a great deal. You can offer packaged rooms, discounted rates, and even exclusive deals to your esteemed guests. This is especially effective during your off-peak seasons when you usually have more rooms to spare.
This also helps in strengthening the goodwill you share with your valued patrons and of course, in reinforcing brand recognition. Play your promotions right and you’ll be able to overcome financial problems.
2. Leverage Technology
Various programs can help in various aspects of your business and ultimately help in boosting your ADR. We highly recommend looking into accounting software specifically designed to be used in the hospitality industry. This will organize your financial records better than any analog method can, especially if you’re tracking multiple streams of income.
All your statements will be in one place, properly cataloged, and ready to be analyzed whenever you need them. Most programs are equipped with an analytics tool, providing you with data-backed information. This will allow you to refine your budgeting and pricing strategies.
A hospitality property management software is another helpful online tool. It will show you all your occupied and unoccupied rooms at a glance, and crunch those ARD numbers per day without the need for human computation.
While efficient, letting your accounting team compute the numbers on their own makes it prone to human error. At the end of the day, relying on a computer program for this, especially one integrated with artificial intelligence.
Lastly, technology in the form of online websites, CRM software, booking dashboards, and mobile applications make your establishment more accessible to guests.
💡 Curious about the evolution of hotel technologies? Check out our blog post where we tell the hotel tech story, from In-Room Phones to Open APIs. A timeline of hotel technology advancements and their benefits: [The Evolution of Hotel Technologies]
3. Turn Loss Into Gains
The hospitality industry is set apart from the others. We have limited resources to work with.
For instance, those in manufacturing and retail can simply add products to their line. In the meantime, hoteliers only have limited rooms and amenities to work with and it will take a significant amount of resources to make adjustments.
We do have an advantage, though. We don’t lose our capital in the same way as retailers do whenever they put their unsold items on sale. Our rooms and amenities will always be there.
This aspect makes them a great tool to entice customers to spend more by giving them a taste of what they’re missing. We can allow them access to vacant facilities and services, knowing that most of them will be encouraged to spend more on them during their stay. You can even take your customer engagement programs a step further by providing extended stay discounts.
4. Work With the Community
Lastly, don’t forget that you can always seek out local partners as well. There are different ways to reach out to your community.
First, you can affiliate with business owners so that you can both enjoy mutual benefits. For instance, working with an events organizer can help keep your rooms occupied and boost your ADR.
Meanwhile, your partner business can pitch a discounted rate to their clients, giving them an advantage over the competition. It’s a triple win since guests will be able to enjoy lower rates too.
Second, getting in touch with the locality will make you aware of upcoming tourism opportunities and events. You can even offer your guests tickets directly. We’re sure they’ll be glad to pay additional for the entertainment. Doing so can potentially raise your ADR as well.
Finally, there are a lot of hotel owners who don’t consider their local community as potential patrons, thinking that their target demographic is mostly travelers coming from other parts of the map. This is not true. Guests can come from anywhere. Ignoring your immediate environment is equivalent to putting a limit on your potential.
👉 One of the trends in travel demand in 2021 is domestic travel, due to the restrictions caused by the pandemic. Read more here about the trends: [Hospitality Trends 2021]
In any case, now that we have an idea of how to increase ADR, we can finally move on to talk about the possibilities that you can expect.
The Benefits of an Increased ADR
- Profit. We will be remiss if we don’t reiterate what increasing your ADR will mean in the bigger picture of your total revenue. In fact, what are the odds that this is already your goal coming into this article in the first place?
- Stability. More important than just boosting your numbers, though, is the promise of stability. One of the challenges that hotel owners face is the unpredictability of the seasons. We’ve seen establishments rise and fall even amidst peak season activity. Achieving a higher ADR will give your hotel more stability to weather through tougher storms.
- High Job Satisfaction. Finally, your employees will also be able to enjoy the same peace of mind that stability brings, making way for higher job satisfaction overall. The best thing about it is that it motivates your employees to serve guests better. It creates a healthy ecosystem where everyone thrives.
Increase Hotel ADR
A hotel’s average daily rate is easily one of the most important metrics that a hotelier needs to be aware of. It can help you boost occupancy and pave the path to success.
There are different ways to increase hotel ADR, but we hope that we have given you enough ideas to get you started in the right direction. Of all our tips, though, signing up for a cloud-based online system still prevails to be our most highly recommended.
About the author: Jim Hughes is a content marketer who has significant experience covering technology, finance, economics, and business topics. At the moment he works as Content Manager at OpenCashAdvance.com.
🤓 Want to learn more about Hotel Revenue? Then sit comfortably and watch Hotel Cast TV episode: Revenue of the Future: Humans & Machines in Hotel RM, a free webinar with Francine Heywood, Regional Sales Manager EMEA at OTA, Damiano Zennaro, Director, Global Advisory Services at IDeas, and Paula Careirão, Content Specialist at Asksuite, where they talk about how technology can boost revenue, especially direct bookings, and more. Just click on the button below: