Occupancy Rate

What is occupancy rate?

Occupancy rate indicates how much of your inventory is rented compared to what’s available. In hotels, it’s the number of rooms occupied divided by total rooms available. We’ll focus on hotels here.

Occupancy is expressed as a percentage (100% is full). It’s most useful alongside other KPIs to evaluate the financial health of your business.

Occupancy rate formula: how and when to calculate

Track it frequently to guide pricing and operations. Use:

(Rooms occupied ÷ Total rooms available) × 100

Example: 50 rooms total, 15 occupied last night → 15 ÷ 50 × 100 = 30%. Vacancy rate is the complement (70% here).

Average occupancy rate in the hotel industry

Benchmarks matter. A 60% occupancy can be strong if your market is at 40%—or weak if the market is at 80%. Recent figures show the U.S. around 66% on average. Recent continental snapshots:

• Europe: 78%
• Asia: 64%
• Middle East & Africa: 67%
• North America: 66%
• South America: 56%

Why is the occupancy rate important?

It’s a barometer of booking success and seasonal trends. It won’t show profitability by itself, but it tells you when to act—e.g., adjust pricing, promos, or costs.

3 ways to achieve high occupancy rates

1. Alter your pricing strategy. Use dynamic pricing for events/seasonality, value-added pricing for differentiated services, and segmented pricing for stays or room blocks. Tools like Cloudbeds’ Pricing Intelligence Engine help automate rules and react to market shifts.
2. Adjust stay restrictions. For peak periods, minimum length-of-stay can build shoulder nights and overall utilization.
3. Avoid overselling without a strategy. Overbooking can backfire; only do it with a clear, data-driven plan.

Occupancy rate and other hospitality KPIs

Pair occupancy with ADR and RevPAR to get a fuller picture of performance.

Occupancy rate and ADR

ADR = average room revenue per room sold. A low occupancy with a strong ADR may be fine; high occupancy with a weak ADR may signal underpricing. Formula: ADR = Total room revenue ÷ Rooms sold.

Occupancy rate and RevPAR

RevPAR blends rate + occupancy. Formula: RevPAR = ADR × Occupancy rate. See the RevPAR calculator.

Final thoughts

Knowing your occupancy rate helps you spot trends and act—so you can increase revenue and grow sustainably.