What is Occupancy Rate?
Occupancy = Rooms Sold ÷ Rooms Available
The percentage of available rooms that are sold on a given night, week, month, or year.
Occupancy Formula
Occupancy Rate = (Rooms Sold ÷ Total Available Rooms) × 100
Occupancy Calculation Example
Example: Saturday Night
Total Rooms in Hotel100
Out of Order Rooms5
Available Rooms95
Rooms Sold76
Occupancy Rate80%
Calculation: 76 ÷ 95 × 100 = 80% occupancy
Note: Out of Order (OOO) rooms are typically excluded from available inventory when calculating occupancy.
What's a Good Occupancy Rate?
| Hotel Type | Good Annual Occupancy |
|---|---|
| City Business Hotels | 65-75% |
| Leisure Resorts | 55-70% |
| Budget Hotels | 70-85% |
| Airport Hotels | 70-80% |
| Pilgrimage Destinations | 50-65% (seasonal) |
Warning: 100% occupancy is NOT always good! It often means you're pricing too low and leaving money on the table. You could have charged more.
Where Occupancy is Used
| Use Case | Example |
|---|---|
| Daily Operations | "We're at 45% for tonight - should we drop rates?" |
| Staffing Decisions | "80% occupancy means we need full housekeeping staff" |
| Forecasting | "Last Diwali we hit 95%, expect similar this year" |
| Owner Reports | "Monthly occupancy: 68%, up from 62% last year" |
| Loan Applications | Banks want to see historical occupancy trends |
Occupancy vs RevPAR
Occupancy alone can be misleading. Compare these two scenarios:
Hotel A: High Occupancy, Low Rates
Occupancy90%
ADR₹2,000
RevPAR₹1,800
Hotel B: Moderate Occupancy, Good Rates
Occupancy65%
ADR₹4,000
RevPAR₹2,600
Hotel B earns ₹800 more per available room despite 25% lower occupancy!
How to Improve Occupancy
- Dynamic Pricing: Lower rates during low demand periods
- OTA Visibility: Optimize listings, respond to reviews, update photos
- Last-Minute Deals: Offer discounts for same-day bookings
- Corporate Contracts: Secure regular business from companies
- Group Bookings: Target weddings, conferences, tour groups
- Marketing: Run campaigns during traditionally slow periods
- Extended Stays: Offer weekly/monthly rates to fill gaps
Pro Tip: Track occupancy by day of week. Most hotels see patterns (busy weekends, slow Tuesdays). Create day-specific strategies.
Occupancy by Day of Week (Typical Pattern)
| Day | Business Hotel | Leisure Resort |
|---|---|---|
| Monday | 75% | 40% |
| Tuesday | 80% | 35% |
| Wednesday | 80% | 35% |
| Thursday | 75% | 45% |
| Friday | 55% | 70% |
| Saturday | 45% | 90% |
| Sunday | 40% | 60% |
Common Occupancy Mistakes
- Chasing 100%: You probably underpriced if you're always full
- Ignoring comp rooms: Include complimentary rooms in sold count
- Wrong base: Use available rooms (minus OOO), not total rooms
- Not tracking patterns: Without history, you can't forecast