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Learn how to calculate and increase your hotel’s occupancy rate

  Posted in Revenue Management

In order to improve your hotel’s occupancy rate, there are a few things you need to consider. For example, you want to know how to calculate your current occupancy rate, how optimal your current rate is, and whether there are specific times you should be focusing on.

If your hotel’s occupancy is great on the weekends but poor during the week, or if there’s an off season where your hotel really struggles, that’s worth investigation. It can mean that you aren’t seeing the kinds of numbers you should be.

It’s always good to know what your competition is doing, but finding that out isn’t easy and may not be possible. If that’s not something you can discover, there’s still plenty to focus on when it comes to your improving the occupancy rate at your hotel.

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What is occupancy rate?

The occupancy rate of your hotel is based on the number of rooms you have filled. You can look at this figure by day, week, month, or even longer. The rate will be different depending on the length of time you consider.

For example, your average hotel occupancy rate may be near 100% on Saturday nights, but it may be closer to 30% on Tuesdays.

Taking a careful look at your occupancy rates can give you a lot of insight and information regarding your hotel. If the occupancy rate isn’t what you think it should be, some changes may be in order.

Think of your hotel occupancy rate as a percentage of rooms booked for that night. When you have a lot of booked rooms you have a high rate of hotel occupancy. A lot of empty rooms means a lower rate. This is not always bad, and happens to nearly every hotel at some point, but you want to have as high of a rate as possible, as often as possible.

Occupancy rate formula

To calculate your hotel’s occupancy rate, you need to know how many total rooms you have, and how many of them are filled. If you have 100 rooms, and 30 of them are filled, you have a 30% occupancy rate. While those numbers are easy to work with, you may have 118 rooms, or 353. For that calculation, there is a simple hotel occupancy rate formula.

Let’s do the maths for an occupancy rate:

To understand your average hotel occupancy rate, you simply divide the number of rooms that are booked by the total number of rooms you have at your hotel.

So if you have 353 rooms total, and 212 of them are full, you have a 60% occupancy rate.

That can give you a good marker for occupancy levels for the night, letting you know what days of the week and times of the year are best for your hotel, and which seasonal periods need work.

You can also calculate the average occupancy rate for more than just one night, if you want it as an average for a week, a month, or even longer. To do this, determine the number of total rooms you have, and the number of rooms that were filled every night.

If you want the average rate for the week, you would add together the number of rooms that were filled every night, divide that number by seven days, and then divide the resulting number by the number of total rooms you have for rent.

How to calculate occupancy rate [online calculator]

You can calculate your occupancy rate using our free occupancy calculator here.

What is the average hotel occupancy rate?

For the most part, between 2015 and 2019, global hotel occupancy rates have remained between 50% and 80%, with peaks and troughs in line with seasonality. However, there have been some occasions where occupancy has drifted outside these margins. In June 2017, for example, the occupancy rate of hotels in the Middle East and Africa fell to just 47.5%. Europe has exceeded a rate of 80% thrice during the given time frame, once in September 2015, September 2016 and again in September 2017.

The graph below from Statista shows the monthly hotel occupancy rates worldwide from 2015 to 2019, by region.


According to this data, as at May 2019, the hotel occupancy rates in key regions was as follows:

  • Asia Pacific: 68.5%
  • Americas: 68.1%
  • Europe: 74.9%
  • Middle East and Africa: 51.7%

What is a good occupancy rate for a hotel?

In general a good hotel occupancy rate will depend on:

  • The type of hotel
  • The location
  • Guest experience and reviews
  • Quality and variety of amenities

Looking at occupancy rate in isolation is rather meaningless, you need to evaluate it in conjunction with other metrics to understand if increasing, or decreasing, your occupancy rate is the right thing to attempt.

However it’s not a realistic expectation to think you can have a full hotel all the time. You may have empty rooms sometimes – most often this occurs on weeknights. You may also have times of the year where you don’t see as much business, and your occupancy rate dips lower than you would like. For example, if your hotel is located in a popular ski destination, you may see lower occupancy during the summer months. A hotel at the beach will expect lower occupancy rates in the winter.

Comparing yourself with other hotels in the area can help you get a good gauge of whether you have a competitive occupancy rate. A newer hotel in a prime location will often see higher occupancy rates, but only if your costs are fair and you treat customers well.

How to improve hotel occupancy

Fortunately for any hotel that may be struggling, or that just wants to see higher numbers for occupancy because they have empty rooms, there are plenty of tips to improve hotel occupancy rate numbers. Cleanliness, price, and guest experience are big factors, but there is so much more you can do.

Consider the following ideas to help you improve your current hotel occupancy rate.

#1 Create packages and promotions

When your hotel has something more to offer than the competition around you, your occupancy rates are going to go up. That’s a good thing, and it’s something you want to see. But think carefully about the packages and promotions you want to offer.

If your occupancy rates rise, but your prices are so low that your hotel isn’t actually making any money from its guests, those rates don’t mean anything. You can fill your hotel to capacity every night with prices that are low enough, but you’ll still be losing ground financially.

Instead, offer great packages and promotions that help people save money but are still targeted with strong pricing for your hotel in mind.

#2 Target the right markets

If your occupancy rates are lower than your competition it could mean that you are not reaching the right people with marketing initiatives.

You need to make sure your hotel is reaching the people who will be most likely to stay there. That could be business travellers, young couples with families, or any other specific types of groups.

Knowing your target market matters, and when you focus your marketing and promotional efforts on appealing to that market will help you increase your occupancy rate.

#3 Use events

If there are cultural events that happen in your city, why aren’t you seeing a spike in occupancy? Why aren’t the people who come to these events staying with you?

Those are questions that you need to answer in order to raise your occupancy rates to where you’d like them to be. Talk to groups in the area that put on these types of events, and find out what you can do to be a part of all the action and excitement.

Market to people who have stayed there before, and who may not know about the event. The goal is to bring people to your hotel when they come to the event, and to potentially hold events at the hotel as well.

#4 Partner with local businesses

Companies often need hotels when they send their employees to various locations for business trips (learn how to attract these business travellers to your hotel here). Local companies may have people coming in from outside the area, and companies with a number of locations in areas around the country may have get-togethers in specific places.

These companies can easily be contacted, and there are ways to work with them to provide meeting spaces, rooms at a discount, and other perks and amenities that they may appreciate. Getting these companies to book rooms at your hotel can really raise your occupancy rate.

#5  Help people declare their love

Holding weddings at your hotel can be an excellent way to raise your occupancy rate. Even if the couple getting married are local, they probably have friends and family members who will be coming to the wedding from outside of the area.

Those people will need a place to stay, and what better place than the hotel where the wedding is being held. You don’t need a dedicated chapel to do this. You can use a meeting room that can be decorated, or other types of locations that can be romantic and beautiful.

Discounts for midweek weddings can also be a great way for you to increase your midweek occupancy. It will cost the couple less than a weekend wedding, and it will also help to raise occupancy rates during a time when these rates are typically lowest.

#6 Work with real estate agents

People who are coming to town and looking for properties to buy or rent will need somewhere to stay. Why not your hotel? It can be a great choice, but people have to know about it.

If you have good relationships with local real estate agents, these agents can recommend your hotel to the people they work with. That can help your occupancy rate increase, and can get you repeat business in some cases.

For example, when the people who are looking for property return to look again, or they move into the area and are waiting to close on the home they chose on their last trip to your location, they will need somewhere to stay. Feeling welcomed by the local community and its businesses is a great way to help people feel good about their new area and all it has to offer, as well.

When you focus on your hotel occupancy rate it can seem discouraging if it isn’t where you want it to be, but when you employ the right tips and tricks to raise it organically, it becomes much easier for your hotel to do well and for you to feel good about the options and choices you have available to you.

With a higher average hotel occupancy rate you’ll see more people coming to your hotel, and word-of-mouth advertising will spread. You can also help more people, and show your local community that you acknowledge them and want to be a part of that community in many positive ways.

List your best available rate (BAR)

Best available rate relates to the best publicly available rate for guests booking at your hotel. This is before customers might apply loyalty points or promotional codes to receive discounts.

The BAR rates are available to the general public, do not require pre-payment and do not impose cancellation or change penalties and/or fees, other than those imposed as a result of a hotel property’s normal cancellation policy.

BAR pricing is an attempt to reduce confusion for hotel guests caused by complex rate strategies with many different prices.

This means the guest could pay different prices each night. The rate distributed will fluctuate to be the same as unrestricted rates available publicly on any other channel, including online retailers, hotel web sites, global distribution system (GDS), and more.

How to increase occupancy in hotels during the week

It can be easy, and very tempting, to think that slashing rates to virtually nothing will sell more hotel rooms and increase room revenue during the week. While it may sell a few rooms, the discounting strategy rarely sells enough to offset the reduced revenue.

It’s important to keep in mind that lower rates don’t create demand; they can set the wrong expectations for guests and erode your price integrity. Instead, think of adding value to beat the midweek blues.

Here are 11 effective ways to boost your hotel’s midweek occupancy and revenue:

1. Create and promote special packages.

Packaging allows you to mask actual room rates with features, which add value to staying at your hotel. If your hotel offers additional services like fitness classes and spa treatments, package them together with accommodation for a really great deal that encourages guests to use services they may not have previously thought about.

2. When it comes to marketing, think who might be a weekday target audience, and geographically where they are.

Try collaborating with tourist attractions locally and submit advertisements or editorial to newspapers and websites in population centres within the vicinity promoting midweek breaks that include bus tours, wine tasting trips, or a concert.

3. Develop mailing lists.

Develop mailing lists of your best weekend customers and stay in contact with monthly emails listing midweek special offers and promotions. Remind them that midweek is the best time to visit local shops and attractions; away from the weekend crowds. Mail them midweek discount vouchers too.

4. Use your imagination and create special one-day conferences, poetry readings, art shows, and other cultural events for during the week.

These are especially popular with people in their late 50s and early 60s and importantly these are the people who often have the most disposable income. Think about holding exhibitions of students’ work in conjunction with local schools and colleges.

5. Promote your space to local companies who could use it for meetings and social events.

Be clever and target companies that have branches or offices elsewhere so visiting delegates may need accommodation.

6. Offer ‘2for1’ meal rates.

You can also offer free drinks or desserts for midweek visitors via newspaper advertising and social media posts.

7. Promote midweek weddings.

With more people working freelance or flexible hours, weddings during the week are becoming more popular; especially for second marriages or older couples who value the intimacy of a quieter occasion. Make sure they don’t clash with corporate events or any other activity that could spoil the atmosphere.

8. Tempt your weekend guests to extend their break and stay longer.

Use discount deals and make sure your guests know about it. Tell them in your pre-stay email and in person when they check in.

9. Reach out to the largest restaurants in town.

Do this in October or November and offer up a special rate to groups with Christmas parties planned during the week at those restaurants.

10. Find out who the local key players are in real estate – commercial as well as residential.

There are hundreds of people in town every night viewing a new house or opening a new office and they need a place to stay. Offer the realtor or agent special rates, and free advertising in your room brochure.

11. Offer midweek breaks as prizes.

For example, you can make it your prize in Facebook competitions and boost likes at the same time.occupancy-rate-hotel-packages

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