How to calculate hotel occupancy correctly
More than 30 years in hotel rooms division, from hostels to five-star chain hotels; focused on revenue management since 2009.
Hotel occupancy is the number of room nights sold divided by the number of room nights you could sell. The departure day is not a night, rooms out of order are not available, and virtual room types do not add capacity. Done right, occupancy can never be above 100%.
The formula
A worked example
Example figures. 40 × 30 − 12 = 1,188; 1,020 ÷ 1,188 = 85.9%.
Four things that make occupancy wrong
- Counting the departure day: a stay from Monday to Wednesday is two nights, not three
- Counting virtual or linked room types as extra rooms, for example a double that is also sold as a single
- Forgetting rooms out of order, or deducting them twice
- Counting cancelled bookings that were later shown as confirmed again
Above 100% means a counting error
A hotel cannot sell more room nights than it has rooms. If a report shows more than 100%, something is counted twice. That is worth checking before the figure goes into a decision or a report to an owner.
RevView counts nights the same way on every page and checks every month against the number of rooms you have.
Questions
Do complimentary rooms count in occupancy?
They are sold room nights without revenue. Count them in occupancy and keep in mind that they lower ADR.
Is occupancy the same as bed occupancy?
No. Room occupancy counts rooms; bed occupancy counts beds. Hostels often look at beds.
How do I compare occupancy with last year?
Compare the same period, and in a weekly view the same weekdays: 364 days back, so a Saturday is compared with a Saturday.