What impact does a $1 increase in ADR have on total income?

When analyzing the impact of a $1 increase in Average Daily Rate (ADR) on total income, it’s important to consider the ratio of income generated per room sold and the number of rooms sold. A $1 increase in ADR directly translates to an increase in revenue for each room that is occupied.

Assuming a standard calculation, each additional dollar in ADR contributes to total income based on the number of room nights sold throughout a specific period, typically annualized. In many hospitality industry scenarios, it is often estimated that each dollar increase in ADR can lead to a total income increase determined by the number of available rooms and the occupancy rate.

For this particular scenario, the choice indicating an increase in income of approximately $27 suggests a calculation that reflects the typical relationship between ADR, occupancy rates, and total revenue generation when multiplying the increase by the average number of room nights sold. This reflects the common understanding that not only does ADR affect immediate income, but the impact can be cumulative based on consistent occupancy trends.

Given this analysis, the choice indicating an increase of approximately $27 per $1 increase in ADR is rooted in realistic revenue models within the hospitality industry, making it a plausible outcome based on calculations often used by financial analysts to project income changes related to room