ARI (Average Rate Index)

What is the ARI in the hotel industry?

Average Rate Index (ARI) is a measure of the average rate charged by a hotel in a particular market compared to other hotels in the same market. It is typically calculated on a monthly basis. 

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How is a hotel’s average rate index calculated?

A hotel can determine where they land in the ARI by comparing their Average Daily Rate (ADR) against the average ADR in their local compset. 

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The formula for ARI is: ARI = ADR / Compset’s aggregate ADR

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A score of 100 in the average rate index indicates that a hotel is right in line with average prices across their market and should expect occupancy rates that reflect that fact. 

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Why is ARI important to hoteliers?

The Average Rate Index is an important metric for hoteliers because it helps them to measure the performance of their hotel in terms of room rate. By tracking the ARI, hoteliers can determine how their prices compare to other hotels in their area, as well as how their prices have changed over time. This information helps hoteliers to set appropriate room rates and adjust pricing strategies if needed. Additionally, the ARI can be used to identify areas for cost savings and increase profitability.