Occupancy rate

A hotel’s occupancy rate, the taux d’occupation (TO) in French, is the ratio of rooms sold to rooms available over a given period, expressed as a percentage. It measures how full the hotel is, regardless of the price charged.

Calculation

• Occupancy rate = rooms sold ÷ rooms available × 100

A fictitious, rounded example: a 40-room hotel open all year has 14,600 room nights available (40 × 365). If it sells 10,220, its occupancy rate is 10,220 ÷ 14,600 = 70%. With an average daily rate of €120, its RevPAR is 70% × €120 = €84.

The figure depends on conventions that must be stated: rooms out of order during works (deducted from rooms available or not), complimentary and house-use rooms (usually excluded from rooms sold), and closing periods for a seasonal hotel (calculated over the opening period or the full year).

In a transaction

A buyer reads occupancy over several financial years, on a rolling twelve-month basis and month by month, to measure seasonality. It is reconciled with the property management system and with reported revenue, then cross-checked against average daily rate. High occupancy with a low rate may reveal untapped pricing power. Low occupancy may stem from distribution, the condition of the rooms or local demand: the analysis shows which of these dominates.

Not to be confused with

• Bed or guest occupancy, which compares the number of guests with the number of beds. It appears in some official statistics and is not comparable with occupancy by room.
• Segment fill rates (groups, meetings), which cover only part of the hotel’s capacity.

For a valuation based on operating data: hotel valuation.