Occupancy rate is the first number most hoteliers learn, and for good reason: it tells you, at a glance, how full your hotel is. It is simple to calculate, but easy to read the wrong way. Here is the formula, a worked example, and the context that stops occupancy from misleading you.
The formula
Occupancy rate is just two numbers:
Occupancy rate = (rooms sold ÷ rooms available) × 100
Rooms sold is how many rooms were actually occupied. Rooms available is your total sellable rooms for that period. Multiply by 100 to get a percentage.
A worked example
Say your hotel has 25 rooms. On Saturday night, 18 were occupied. Your occupancy for that night is 18 ÷ 25 = 0.72, or 72 percent. For a whole month, add up rooms sold across every night and divide by available room-nights: a 25-room hotel over 30 days has 750 available room-nights; if you sold 500, that is 500 ÷ 750 = 67 percent for the month.
What counts as a good rate
There is no universal target, it depends on your market and season, but many independent hotels aim for a yearly average of 65 to 80 percent. A word of caution: 100 percent is not automatically a win. If you filled every room by slashing your rate, you were probably leaving money on the table. High occupancy at a healthy rate is the goal, not high occupancy at any cost.
See occupancy, ADR and RevPAR without a spreadsheet
Sukoon calculates occupancy, average rate and revenue per room automatically from your bookings, in real time. The numbers a big chain has, for an independent hotel.
See Sukoon's dashboardRead it with two other numbers
Occupancy answers "how full?" but not "how profitably?" Two hotels at 70 percent can earn very different money depending on their rate. That is why you always read occupancy next to ADR (average daily rate) and RevPAR (revenue per available room). We explain all three, with formulas, in RevPAR, ADR and occupancy explained.
How to lift a low number
If your occupancy is soft, the fix depends on when. Weak weekdays or a dead season call for targeted demand: our guide to increasing occupancy in the off-season covers the levers. And filling rooms through your own channel rather than OTAs keeps more of the revenue, which is the point of chasing direct bookings.
FAQs
What is the formula for hotel occupancy rate?
Occupancy rate = (rooms sold / rooms available) x 100. If you sold 18 of 25 available rooms on a night, occupancy is 72 percent. Use the same formula over a month or year by summing rooms sold and available room-nights across the period.
What is a good hotel occupancy rate?
It varies by property and season, but many independent hotels aim for 65 to 80 percent averaged over the year. A very high figure is not always good if you achieved it by dropping rates too far; occupancy should be read alongside ADR and RevPAR.
Do you count out-of-order rooms in occupancy?
Standard practice is to include all physical rooms in available rooms, even those out of order, so the number reflects true capacity. Some hotels exclude long-term out-of-order rooms; whichever you choose, stay consistent so your trend is comparable.
Why is occupancy rate not enough on its own?
You can fill every room by pricing too low and still lose money. Occupancy tells you how full you are, not how profitably. Pair it with ADR (average rate) and RevPAR (revenue per available room) to see the whole picture.