Hotel occupancy rate: what is it, how is it calculated and how to improve it?
The hotel occupancy rate is one of the main performance indicators in accommodation management. Its analysis not only reflects the percentage of occupied rooms over the total available, but also allows strategic decisions to be made in pricing, distribution, marketing and operations. Understanding its calculation, evolution and relationship with other KPIs is essential for any hotel management aimed at maximising revenue and operational efficiency.
What is the hotel occupancy rate?
The occupancy rate indicates what proportion of the available room inventory has been effectively used in a given period. Its reading should be contextualised according to seasonality, customer segment, source channel and rate strategy applied.
How the occupancy rate is calculated
Standard formula applied to the hotel sector
Occupancy Rate (%) = (Occupied Rooms / Available Rooms) × 100
For example, if a hotel has 120 rooms available and 90 are occupied, its occupancy rate is 75%.
Practical examples: small hotel vs. hotel chain
- 30-room independent hotelif 870 rooms are occupied in August for the month (30 × 29 days = 870 available), the occupancy is 100%.
- Chain with 5 hotels with 100 roomsif on an average day it has 350 occupied rooms, the occupancy is 70%.
Factors influencing the rate change
- Seasonality and days of the week
- Local events and macro-events (fairs, festivals)
- Cancellation and advance booking policies
- Direct competition and dynamic pricing
- Channel strategy and visibility in OTAs
Indicators related to the employment rate
KPIs associated with occupancy not only serve to contextualise occupancy, but also to link it to actual revenues and operating margins. Effective analysis must consider how these indicators interact to avoid erroneous decisions based on occupied room volumes alone.
ADR (Average Daily Rate)
ADR represents the average revenue generated per room sold, regardless of how many rooms are available. It is calculated using the formula:
ADR = Room Revenue / Occupied Rooms
Practical example:
A hotel that earns €24,000 in one day and has sold 100 rooms has an ADR of €240.
Operational relevance:
An increase in ADR does not always imply higher profitability if the occupancy rate falls. The strategy should seek a balance between perceived value and price elasticity according to segment and channel.
RevPAR (Revenue per Available Room)
RevPAR is a composite indicator that measures the revenue per available room, whether occupied or not. It has two ways of calculation:
- RevPAR = ADR × Occupancy rate
- RevPAR = Revenue per room / Rooms available
Practical example:
If the ADR is 120 € and the occupancy is 80%, the RevPAR will be 96 €.
In a hotel with 200 rooms, this implies €19,200 per day for accommodation alone.
Tactical relevance:
It allows you to compare the performance of different hotels, periods or strategies without relying on occupancy alone. It is especially useful for year-on-year analysis or competitive benchmarking.
TRevPAR and GOPPAR as an evolution of the analysis
Includes total guest revenues: accommodation, catering, events, additional services.
Example:
If a total of €30,000 is generated with 200 rooms available, the TRevPAR is €150.
GOPPAR (Gross Operating Profit per Available Room):
Adds the operating cost variable. Reflects gross profit per available room, which allows to measure real efficiency.
Example:
Total revenue = 30.000 €, operating costs = 18.000 € → profit = 12.000 €.
GOPPAR = 12.000 / 200 = 60 €.
Strategic importance:
GOPPAR is key to evaluate investment decisions, operational changes or campaign efficiency. Two hotels can have the same RevPAR, but different GOPPAR according to their cost structure.
Strategies to improve the employment rate
For large hotels, sustained occupancy growth requires an integrated strategy based on data, technology and market segmentation:
1. Price adjustment with revenue management
Implement an RMS connected to the Channel Manager and PMS to apply dynamic rates based on demand, competition, history and upcoming events. The key is to segment by channel, anticipation and customer type, maximising fill rate without eroding ADR.
2. Digital marketing and local SEO actions
Optimises hotel visibility in geolocated searches, works with Google Hotel Ads, Meta Ads and retargeting campaigns. Ensures the booking engine is linked to SEM and remarketing campaigns with real conversion tracking.
3. Promotions aimed at off-season stays
Activate discounts conditional on off-peak dates, extra nights, themed packages or secret subscriber rates. Target segments such as seniors, short breaks or corporate travellers in low season.
4. Guest loyalty and repeat bookings
Integrate a hotel CRM connected to the PMS to identify repeat patterns, send personalised offers and trigger automatic upgrades. A points programme or exclusive direct channel benefits can reinforce this channel.
5. Presence in OTAs and key sales channels
Maintain active and optimised distribution on relevant OTAs for each source market. Use channel managers to avoid rate disparities and take advantage of visibility campaigns from Booking.com, Expedia and niche portals according to the target guest profile.