👉 Is your average rate above or below the market?
📘 What is Average Rate Index (ARI)?
The Average Rate Index (ARI) is a KPI that compares a hotel’s Average Daily Rate (ADR) with the average ADR of its market or competitive set.
Its purpose is to measure how the hotel’s pricing position compares to its competitors and whether it is selling above, below or in line with the market.
ARI is one of the most widely used indicators for assessing pricing performance in Revenue Management.
📊 Average Rate Index (ARI) Formula
ARI = Hotel ADR / Market ADR × 100
Where:
- Hotel ADR = the hotel’s Average Daily Rate
- Market ADR = the Average Daily Rate of the competitive set
Typical interpretation:
- ARI > 100 → the hotel is selling above the market ADR
- ARI = 100 → the hotel is selling in line with the market
- ARI < 100 → the hotel is selling below the market ADR
✅ Why is Average Rate Index (ARI) important?
- Measures pricing competitiveness.
- Helps understand rate positioning versus the comp set.
- Supports pricing and revenue decisions.
- Identifies opportunities to optimise rates.
- Complements occupancy and market share metrics.
💡 Practical example of Average Rate Index (ARI)
A hotel has an ADR of €150.
The average ADR of its competitive set is €135.
→ ARI = (150 / 135) × 100 = 111.1
This means the hotel is selling, on average, 11% above the market.
🔄 Disambiguation of Average Rate Index (ARI)
- ARI vs ADR:
ADR measures the hotel’s average room rate.
ARI compares that ADR against the market. - ARI vs MPI (Market Penetration Index):
MPI measures occupancy performance.
ARI measures pricing performance. - ARI vs RGI (Revenue Generation Index):
ARI focuses on rate competitiveness.
RGI combines occupancy and rate performance to measure overall revenue competitiveness.
In summary: ARI = how strong your pricing position is compared with the market.
