Revenue

Occupancy Rate

Occupancy rate is the percentage of a hotel’s available rooms that were actually sold in a given period. It measures how much of the inventory the hotel managed to fill, independent of what it charged.

Formula

Occupancy rate = (Rooms sold ÷ Rooms available) × 100

Occupancy is the simplest demand signal a hotel has, and the one that drives most operational planning: how many staff to roster for housekeeping, how much breakfast to prepare, when to close out lower-rate segments.

On its own it says nothing about profitability. Occupancy can always be bought with a low enough rate, and a full hotel sold cheaply can earn less than a half-full one sold well. This is why occupancy is almost never reported without ADR and RevPAR beside it.

Rooms out of order for maintenance are usually removed from the available-room count, which raises the reported occupancy. As with ADR, comparisons only hold when both properties apply the same convention.

Worked example

A 200-room hotel sells 150 rooms tonight, with 4 rooms out of order. Against 196 available rooms, occupancy is 76.5%.

Frequently asked questions

How do you calculate occupancy rate for a hotel?

Divide rooms sold by rooms available and multiply by 100. A 200-room hotel selling 150 rooms with 4 rooms out of order is measured against 196 available rooms, giving 76.5% occupancy. Rooms out of order are usually removed from the available count, which raises reported occupancy.

What is a good occupancy rate for a hotel?

There is no universal figure, because occupancy can always be bought with a low enough rate. A full hotel sold cheaply can earn less than a half-full one sold well, which is why occupancy is almost never judged without ADR and RevPAR reported beside it.

How can a hotel increase its occupancy rate?

Occupancy responds to rate and availability decisions — opening lower-rate segments, relaxing minimum-stay restrictions, and reaching demand earlier through more channels. The judgement is whether the extra rooms sold are worth what they cost in rate, which is what yield management exists to decide.

Related terms

  • RevPAR — RevPAR (Revenue Per Available Room) measures how much room revenue a hotel earns for every room it has available, whether or not that room was sold. It combines rate and occupancy into a single number, which is why it is the most widely used performance metric in hotel revenue management.
  • 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.
  • Yield Management — Yield management is the practice of continuously adjusting room rates and availability by segment and channel to extract the most revenue from a fixed, perishable inventory of rooms.