Average Bed Rate (ABR)

Average Bed Rate (ABR) is an important metric for hoteliers to understand. You’re likely familiar with Average Daily Rate (ADR), which focuses on room revenue, but for hotels with multiple room types, ABR can be an even more useful metric.

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Why’s that? By looking at the average revenue generated per bed occupied, as opposed to each room, you can get more specific about where your revenue is coming from and how you can market to attract the right kind of guests to maximize earnings — let’s see how.

How Do I Use Average Bed Rate (ABR)?

Any hotel can benefit from analyzing their ABR, but it’s particularly valuable for hotels with multiple room configurations. If your property has suites, bunk beds or other non-standard room types, ABR provides a more granular perspective on the value of each room.

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Using ABR lets you:

 
• Assess revenue efficiency: Compare ABR against operating costs to fully understand profitability per occupied bed.
 
• Optimize pricing strategies: Set more precise room rates based on bed occupancy, maximizing revenue potential across different room types.
 
• Benchmark performance: Track trends in your ABR over time to evaluate the effectiveness of your pricing strategy.

A Real-World Example of Implementing ABR

Curious about how to implement ABR? Let’s say a fictional hotel has a room that contains two full beds, and the total cost of the room is $300 a night. If two people book this room and sleep in separate beds, the average daily rate (ADR) would be $300 per night.

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However, if a couple books and only occupies one bed, the average bed rate would be $150. Therefore, in the event of a couple booking a two-bed room, a hotel would be leaving $150 in potential revenue on the table.

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Once you have this information, you can take actions to increase your ABR. Building on this example, a hotelier could offer an upgrade to this couple in the form of a single queen room. This is a perk for the guests and the hotel — a free upgrade is always welcomed, and you still have the two-bed room available to accommodate a larger party (and thus increase your ABR!).

How to Calculate Average Bed Rate (ABR)

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Utilizing the average bed rate formula is a simple way to make sure you’re maximizing your revenue. Here’s how it works:

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ABR = Total Room Revenue / Total Number of Beds Sold

 
• Total Room Revenue: This includes all income generated from room occupancy, regardless of room type or number of beds.
 
• Total Number of Beds Sold: This represents the total number of individual beds occupied by guests during the analyzed period.

Let’s look at an example:

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If your hotel’s Total Room Revenue is equal to $10,000, and the Total Number of Beds Sold is equal to 50, your equation would be:

 
•    ABR = $10,000 / 50 = $200  

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In this example, your ABR is $200, which shows that you earned an average of $200 for each bed occupied during the analyzed period.

4 Ways to Optimize Your Average Bed Rate (ABR)

By understanding ABR and how to calculate it, you’re able to optimize your revenue strategies to create a larger stream of income. Here are some ways to make this happen:

 
1. Advertise your hotel thoughtfully: Understanding your target audience can be a driver in ABR optimization. For example, if your hotel offers many family friendly suites, incorporate imagery likely to appeal to parents in your sales collateral. This way, the individuals who book will likely be making full use of the space, increasing ABR and ensuring your property and its guests are aligned.
 
2. Offer AI-powered upselling: With AI that’s built for the hospitality industry, it’s simple to offer additional services like in-room dining or spa treatments at times when customer intent is at its highest. With this method, front desk staff won’t have to do hard sales pitches at the front desk, but there’s still no sacrifice to guest spending and overall revenue.
 
3. Utilize dynamic pricing: Being aware of periods when your hotel is likely to be busier or slower can help you utilize dynamic pricing and ensure you are making the most per room. For example, hotels with great views may choose to offer single-bed balcony rooms at a higher price point around Valentine’s Day to increase the rate they receive from couples booking a getaway.
 
4. Invest in technology: While (in most cases) hotels can’t gain any more beds, what they can do is give themselves a competitive advantage — and research indicates that nearly 90% of people said that they would opt for one hotel over another if it offered contactless check-in, checkout and concierge services. Making the investment in technology can help hotels stay booked more than their competitors, bringing up ABR naturally.

Technology’s Role in Optimizing ABR

By leveraging Canary's technology to manage the guest experience, hotels can use technology to refine their pricing strategies and maximize revenue generation per occupied bed. If you’d like to learn more about investing in technology for your hotel, book a demo today.