Occupancy rate is a key performance indicator that measures the percentage of available nights that are booked during a given period. It is calculated by dividing the number of booked nights by the total number of available nights, then multiplying by 100. A high occupancy rate indicates strong demand, but it must be balanced with pricing strategy — a 100% occupancy rate at below-market rates may generate less revenue than an 80% occupancy rate at higher prices.
Why this matters for property managers
It is the quickest gauge of how well supply is meeting demand, but read alone it can mislead, since a full calendar won at cut-rate prices can earn less than a half-full one at healthy rates. The useful question is not just how many nights sold but at what rate and cost. Used alongside average rate and net revenue, it points to whether pricing, minimum stays, or marketing need attention.
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