Average Rate Index (ARI)

What is the definition of ARI in the hospitality industry?

ARI stands for: Average Rate Index.

It is a Hotel KPI that deals the performance of their ADR as compared to their comp set throughout the same period (spirited set: a group of other hotel brands and contestant that have a similar aim market and theory).

How do you compute ARI?

ARI method: ARI= Hotel ADR / aggregate cluster of hotel’s ADR

Calculation:

$150 / $120 = 1.25

(this is that your ADR is 25% better than the average of your competitive group)

When:

ARI Index = 1.00 The hotel ADR is equal to the middling ADR of their comp set

ARI Index > 1.00 The hotel ADR is more expensive than the middling ADR of their comp position

ARI Index < 1.00 The hotel ADR is less expensive than the middling ADR of their comp set

Depends on the vacancy rate, the hotel can choose to secondary, equal or higher their ADR compared to the ADR or their comp set in order to gain more income and make themselves more competitive towards their competitors.

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