What is the formula for Occupancy Rate?

Occupancy Rate (%) = (Rooms/Units Sold ÷ Rooms/Units Available) × 100. For multi-day periods, sum sold and available over the period. Available should exclude out-of-order and legally unbookable nights.

Should owner blocks and out-of-service nights be included as “available”?

Best practice is to exclude out-of-service nights (maintenance, renovations). Owner or manager blocks are a policy choice: many operators exclude legitimate maintenance/owner stays but keep ‘marketing holds’ in available to avoid overstating occupancy. Disclose your method.

How does Occupancy Rate relate to ADR and RevPAR?

ADR measures price on rooms sold; Occupancy measures volume; RevPAR = ADR × Occupancy. Revenue strategies balance all three—raising rate when pace is strong and stimulating demand when pace lags.

Daily, weekly, or monthly—what granularity should I use?

Use daily for pricing and operations, weekly for near-term planning, and monthly or LTM for trend and budgeting analysis—especially in seasonal lake markets.

How do cancellations and no-shows affect Occupancy Rate?

Count only final rooms/nights sold after cancels and no-shows for the period. Track a separate ‘pace’ view (on-the-books vs. last year) to steer pricing before arrival.

What are common pitfalls when comparing occupancy across markets?

Mix differences (waterfront vs. in-town), treatment of owner blocks, and different denominators (calendar vs. sellable nights) can distort comparisons. Align definitions and property types before benchmarking.

Occupancy Rate

175 0 0 September 13, 2025

Definition: What Is an Occupancy Rate?

Occupancy Rate is the share of your sellable rooms or rentals that are occupied during a defined period. It is a core performance signal in hospitality and short-term rentals (STRs), and—together with ADR—drives RevPAR. In practice, occupancy helps you judge demand strength, set prices, and plan operations.

How to Calculate Occupancy Rate

Occupancy Rate (%) = (Rooms/Units Sold ÷ Rooms/Units Available) × 100

Rooms/Units Sold: Nights actually stayed (or contracted) in the period after cancellations/no-shows.
Rooms/Units Available: Total inventory less out-of-service (OOS) nights; decide and disclose how you treat owner/manager blocks.

Example (hotel night): 180 sold ÷ 240 available = 75%.
Example (portfolio week): 280 sold nights ÷ 350 available nights = 80%.

Why Occupancy Rate Matters

Revenue management: Translate demand into strategy—raise floors and add minimum-stay rules when pace is hot; stimulate with value adds or LOS discounts when it’s soft. See Dynamic Pricing.
Operational readiness: Schedule housekeeping, maintenance, check-ins, and supplies based on realistic fill, not gut feel.
Benchmarking & investment: Compare markets and assets (waterfront vs. in-town, cabins vs. condos) using aligned definitions to spot opportunities.

Best-Practice Definitions (Denominator Hygiene)

Exclude OOS nights: Renovations, safety issues, or unavailable inventory should not count as “available.”
Owner/manager blocks: Many operators exclude legitimate maintenance/owner use; include “marketing holds” to avoid flattering the metric.
Be consistent: Publish the rule you use so ADR/RevPAR comparisons remain apples-to-apples.

How Occupancy Rate Is Used in Practice

Pricing & pace: Compare on-the-books (OTB) occupancy to last year and to your forecast; adjust rate, fences, and restrictions accordingly.
Channel strategy: Identify dates or seasons where one channel (e.g., Airbnb, Vrbo, Google Travel—semantic entities) underperforms and rebalance merchandising.
Owner communications: Share occupancy trends, shoulder-season tactics, and event impacts to align expectations.

Examples

Urban hotel: 200 rooms, 180 sold → (180 ÷ 200) × 100 = 90%.
Vacation-rental portfolio: 50 homes; holiday week has 40 booked → (40 ÷ 50) × 100 = 80%.
Seasonal student housing: Fall 100%, spring 80%, summer 50%—use seasonal occupancy to plan lease terms and off-season marketing.

Related Terms

Frequently Asked Questions

Is “available” the full calendar or only sellable nights?

Use sellable nights: total inventory minus out-of-service. Owner/manager blocks are a policy choice—state your approach so comparisons are fair.

How often should I review occupancy?

Daily for the next 30–60 days (pricing/ops), weekly for near-term, monthly/LTM for strategic trends—especially in lake markets with strong seasonality.

Why is my occupancy high but RevPAR flat?

You may be buying volume with discounts. Check ADR and conversion; consider lifting floors or adding length-of-stay rules on high-demand micro-windows.

How do cancellations affect occupancy?

Count only final stays. Track a separate pace view (OTB vs. last year) to act early when demand shifts.

Can I benchmark across very different properties?

Yes—align denominator rules, compare like property types/locations, and pair occupancy with ADR and RevPAR to avoid mix distortion.

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