September 24, 2025
Occupancy rate is one of the most important performance metrics in hospitality. It tells hoteliers how many rooms are filled versus available—and directly impacts revenue. But while increasing occupancy is important, the real challenge is balancing occupancy with profitability. Here’s how to calculate occupancy, why it matters, and how to improve it without sacrificing revenue.
For hotel owners, occupancy is always top of mind. The closer you are to 100%, the better. But simply filling rooms isn’t enough—profitability depends on pairing strong occupancy with smart pricing.
Let’s start with the basics.
The occupancy rate measures the percentage of available rooms that are sold during a given period.
Formula:
\text{Occupancy Rate} = \frac{\text{Number of Occupied Rooms}}{\text{Number of Available Rooms}} \times 100
Example:
If your hotel has 20 rooms and 10 were sold last night, your occupancy rate was 50%.
👉 Important: Only rooms available for guests count toward the calculation—rooms under maintenance or used by staff are excluded.
Occupancy rate is a key performance indicator (KPI) that helps hoteliers understand:
However, occupancy should never be tracked in isolation. Pair it with ADR (Average Daily Rate) and RevPAR (Revenue per Available Room) for a complete view of profitability.
Smart hoteliers use LOS restrictions to balance occupancy and revenue:
An outdated website or clunky booking flow drives guests away. Use a modern booking engine to enable fast, mobile-friendly reservations directly on your site.
Collaborate with restaurants, attractions, and travel agencies to create joint packages or cross-promotions. This drives bookings while adding value for guests.
Instead of cutting rates, bundle perks such as free breakfast, parking, or an extra night at a discount. Packages make your property more appealing without devaluing your brand.
Occupancy shouldn’t come at the expense of profitability. With a revenue management system (RMS), hotels can:
Filling every room isn’t always the most profitable strategy. For example, slashing prices to drive occupancy might increase volume but lower total revenue.
That’s why the best hoteliers track occupancy + ADR together. A modern RMS, like Pricepoint, uses AI to find the optimal balance, ensuring occupancy and rates align for maximum profit.
Hotels using Pricepoint report:
👉 Ready to optimize both occupancy and revenue? Start your free 30-day Pricepoint trial today.
