Key Takeaways
- A common formula is hotel ADR divided by competitive-set ADR, multiplied by 100.
- Above 100 indicates a relative rate premium; below 100 indicates a relative discount.
- ARI does not measure occupancy, total revenue, acquisition cost, guest value, or profit.
Why It Matters to a Hotel
A hotel needs to understand whether achieved room rate is positioned above or below its comparison market, especially when evaluating pricing, mix, value proposition, and RevPAR outcomes.
How It Works
- Confirm comparable currency, tax treatment, period, and room-revenue definition.
- Divide hotel ADR by competitive-set ADR and multiply by 100.
- Review day-of-week, room type, segment, event, and channel context.
- Compare ARI with MPI and RGI to identify rate-versus-volume tradeoffs.
- Investigate changes before making pricing decisions.
Process, Record, or Operating Flow
Illustrative calculation: hotel ADR of $156 divided by competitive-set ADR of $150, multiplied by 100, produces an ARI of 104.0. The hotel achieved a four-percent relative rate premium; the index does not show whether it sold enough rooms.
Practical Hotel Example
A fictional hotel has ARI of 108 and MPI of 89. Leadership tests whether the rate premium reflects a deliberate positioning strategy or whether weak demand capture is suppressing RevPAR and account production.
Department and Role Responsibilities
- Revenue management owns the method, assumptions, and recurring analysis.
- Hotel leadership connects the measure to strategy, guest value, operating capacity, and profitability.
- Sales, marketing, finance, front office, and operating departments contribute accurate inputs and act on approved decisions.
ARI vs. ADR
ADR is the hotel’s rooms revenue divided by revenue-generating rooms sold. ARI compares that ADR with the competitive set. ADR can increase while ARI declines if competitors increase faster.
Common Mistakes
- Treating one metric as a complete explanation of hotel performance.
- Comparing periods, hotels, or segments without matching definitions and scope.
- Using gross results without considering cost, mix, capacity, or data quality.
Best Practices
- Document the formula, period, population, currency, inclusions, and exclusions.
- Reconcile source data before interpreting movement.
- Review trends with complementary revenue, cost, demand, and guest measures.
Limitations, Risks, or Exceptions
ARI depends on provider methodology, competitive-set data, currency, and reporting sufficiency. It should not be treated as proof of pricing power or profitability.
Frequently Asked Questions
Is ARI a target by itself?
No. It is one decision input and should be read with context, objectives, and complementary measures.
Can hotels compare it directly?
Only when definitions, periods, currencies, inventory, and data treatment are comparable.
Does a better result always mean more profit?
No. Revenue mix, acquisition cost, operating cost, displacement, and capital needs can change the profit outcome.
Sources and Review
CoStar — STR Benchmarking Resources and Glossary — www.costar.com/products/str-benchmark/resources/glossary
Hospitality Sales and Marketing Association International — Industry Education and Resources — global.hsmai.org
Cornell Peter and Stephanie Nolan School of Hotel Administration — sha.cornell.edu
Last reviewed: August 3, 2026. Editorial review: SalesHospitality Editorial Team. Reviewed under the SalesHospitality Knowledge Standard.
Help us keep this accurate
See something that needs clarification?
We welcome corrections, missing context, and practical hotel examples that improve this reference.