Revenue

ARI

Average Rate Index

ARI (Average Rate Index) compares a hotel’s ADR with the average ADR of its competitive set. An ARI of 100 means the hotel is achieving the market rate; above 100 it is selling at a premium to its competitors.

Formula

ARI = (Hotel ADR ÷ Comp set ADR) × 100

ARI is the rate half of RGI. It shows pricing power: whether the hotel can charge more than comparable properties and still sell, or whether it is competing on price.

Like MPI, it only makes sense read alongside its counterpart. A high ARI with a low MPI suggests the hotel is priced above what its share of demand will bear; a low ARI with a high MPI suggests it is buying occupancy with discount. The combination that lifts RGI sustainably is an ARI at or above 100 with an MPI that holds.

Worked example

A hotel achieves an ADR of €190 against a comp set average of €200. Its ARI is 95: it is selling at a 5% discount to its competitors.

Related terms

  • RGI — RGI (Revenue Generation Index) compares a hotel’s RevPAR with the average RevPAR of its competitive set. An RGI of 100 means the hotel is earning exactly its fair share of room revenue; above 100 it is outperforming the set, and below 100 it is losing share.
  • MPI — MPI (Market Penetration Index) compares a hotel’s occupancy rate with the average occupancy of its competitive set. An MPI of 100 means the hotel is filling its fair share of rooms; above 100 it is taking more than its share of demand.
  • ADR — ADR (Average Daily Rate) is the average price a hotel actually achieved per room sold over a given period. It measures pricing performance on its own, with occupancy deliberately excluded.
  • Comp Set — A comp set is the group of comparable, competing hotels a property benchmarks itself against — chosen to match on location, segment, quality and the demand they draw from.