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Revenue Management

Net ADR

The realised room rate after the cost of winning the booking — the gap to ADR signals channel and discount health.

Academic definition

Net ADR adjusts Average Daily Rate by subtracting the costs directly attributable to acquiring a booking — principally channel commission and acquisition or marketing cost allocated per room. Where ADR reflects the gross rate a guest paid, Net ADR reflects the rate the hotel retains after paying to win that guest. It is calculated by deducting per-room commission and acquisition cost from ADR. The metric is valuable because two bookings at the same ADR can carry very different acquisition costs depending on channel: a direct booking may incur little, while an online travel agency booking may lose fifteen to twenty-five percent to commission. Tracking the spread between ADR and Net ADR over time reveals shifts in channel mix and discounting pressure. Net ADR captures the cost of acquisition but not the cost of servicing the stay, which CPOR addresses separately.

Net ADR = ADR − Commission per room − Acquisition cost per room

ADR = gross average rate · Commission per room = channel cut per room · Acquisition cost per room = marketing/acquisition allocated per room

Worked example

An ADR of ₹4,000 less ₹720 commission and ₹280 acquisition cost gives Net ADR = ₹3,000. The ₹1,000 gap is what the booking cost to win.

Working sheet
Net ADR₹3,000

The ProfitPAR™ lens

Net ADR is ADR after the toll booths. The size of the gap between the two is one of the most diagnostic numbers a hotel owns: a wide gap means the property is renting its own demand back from intermediaries and sweetening rates to win it. A ₹4,000 ADR that nets to ₹3,000 is quietly telling you a quarter of the rate never belonged to you. ProfitPAR™ treats this gap as a primary lever — push direct share up and the gap narrows, lifting retained profit without touching the headline rate. Net ADR is where the channel-mix battle is won or lost, one booking at a time.

The space between ADR and Net ADR is where the owner's money goes to die.

Measure what each room actually keeps.

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Worked examples use illustrative figures in Indian Rupee (₹) with lakh/crore conventions. They are composite and representative, not drawn from any single property. ProfitPAR™ is a trademark of Sibasish Misra.