What is a hotel occupancy rate?
Put simply, your occupancy rate is the percentage of rooms sold out of the total available over a given period.
Hotel Occupancy Rate Formula:
Occupancy Rate = (Rooms Sold ÷ Rooms
Available) x 100
If you have 100 rooms and sell 75 in one night, your occupancy rate is 75%.
It’s a clear way to track demand and understand how well your inventory is performing. But it doesn’t stand alone. It works best when paired with average daily rate (ADR), revenue per available room (RevPAR), and your direct booking mix.
ADR: shows how much you’re earning per sold room.
RevPAR: reflects how efficiently you’re monetising your inventory
Direct booking mix: helps reveal how much of your revenue you’re actually keeping.
Together, these metrics tell a clearer story than occupancy alone.
How to calculate occupancy rate in real terms
Figuring out your occupancy rate isn’t complicated. It’s a basic measure of how many rooms you sold versus how many you had to sell. That’s the starting point for everything else—revenue, staffing, pricing. Get this number right, and you’ve got a handle on how your hotel is actually performing.
Here’s how to calculate the occupancy percentage:
Let’s say your hotel has 80 rooms.
- On a Tuesday, you sold 52 rooms.
- Occupancy Rate = (52 ÷ 80) x 100 = 65%
If you want your monthly rate of occupancy, you total up all rooms sold across the month and divide that by the total number of available room nights (rooms x days).
Let’s say:
- You have 80 rooms, and June has 30 days.
- 80 rooms x 30 nights = 2,400 available room nights
- You sold 1,872 rooms during the month.
- Monthly Occupancy Rate = (1872 ÷ 2400) x 100 = 78%
Need a shortcut? Use our occupancy calculator to run the numbers faster.
Why your occupancy rate matters more than you think
Your hotel room occupancy rate isn’t just a dusty number to file away in a spreadsheet. It tells you whether your strategy is actually landing: if your pricing is competitive, if your marketing is working, if your rooms are being sold at the right time to the right people. Tracked daily, it helps you course-correct before a quiet week turns into a slow quarter. It’s one of the fastest ways to know if you're staying ahead or falling behind.
It directly impacts:
- Revenue forecasting: Know when to raise rates or plan discounts.
- Operational costs: Plan staffing and housekeeping based on expected occupancy.
- Marketing efforts: Measure the impact of seasonal campaigns or partnerships.
- Channel strategy: See which channels are filling rooms,and at what cost.
When tied to your direct bookings, it also helps you understand how much value you’re keeping versus giving away to OTAs.
If you’re seeing strong traffic but low room nights, your issue might not be demand. Our article on Why Your Hotel Website Isn’t Converting and How to Fix It covers how to diagnose and correct website conversion gaps.
What’s considered a good occupancy rate?
What qualifies as a good rate of occupancy depends on your hotel’s category, market, and seasonality. A small boutique property in a beach town will aim for different benchmarks than a business hotel in the CBD. Still, there are some general ranges hoteliers use to check if they're on track:
- Urban business hotels: 65% to 80%
- Resorts or seasonal properties: 55% to 75%, with peak periods higher
- Budget/economy hotels: 70%+
Higher isn’t always better. A 95% occupancy rate might feel good, but if you’re selling too many rooms at a discount, you could be undercutting your ADR and overall profitability. The sweet spot is where your occupancy and room rates are both strong, that’s your real growth zone.
When should you calculate occupancy rate?
There’s no one-size-fits-all answer—but there is a wrong one: only calculating it at the end of the month. That’s too late to fix anything.
Smart operators track hotel occupancy rates on a rolling basis. Here's how different timeframes help:
- Daily: This helps identify immediate issues like pricing misfires, slow pickup, or cancellations. It’s useful for on-the-fly adjustments.
- Weekly: Use this to spot emerging trends: midweek softness, OTA over-reliance, or missed upselling opportunities.
- Monthly: This is your reporting foundation. Compare it against budget, year-over-year trends, and segment performance.
- Seasonally: Benchmark performance across major seasons or demand windows. Useful for forecasting and annual planning.
- Post-campaign or event: Want to know if that promo or package actually worked? Look at occupancy before, during, and after the push.
Bottom line: frequency depends on your goals. But if you’re only looking at occupancy after the fact, you’re always reacting instead of leading.
