Hospitality Performance
Occupancy Rate
Definition
Occupancy rate is the percentage of available hotel rooms that are occupied during a given time period, calculated by dividing rooms sold by total rooms available, serving as a primary measure of demand and operational efficiency.
Formula
Occupancy Rate = (Rooms Sold ÷ Total Available Rooms) × 100
Why It Matters to Hotel Investors
- Indicates market demand and the property's ability to attract guests
- Affects operating efficiency and per-room costs
- Combined with ADR, determines overall revenue performance (RevPAR)
Common Mistake
Chasing high occupancy at the expense of ADR—filling rooms at discounted rates reduces overall profitability.
Related Resources
RevPAR (Revenue Per Available Room)
Revenue Per Available Room (RevPAR) is the most important hotel performance metric, calculated by multiplying ADR by occupancy rate, showing how efficiently a hotel generates room revenue across its total available inventory regardless of whether rooms are occupied.
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