Occupancy is an important hotel key figure, which can be used to determine the occupancy of available capacities. Likewise, the room occupancy is needed for the calculation of the RevPar.

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What is the room occupancy rate?

You can calculate the occupancy rate for rooms or beds. You can look at the room occupancy for different periods of time. Usually the analysis is done per day, week, month or year. User-defined periods and seasons are also possible. Looking at a longer period of time is useful because some hotels have different occupancy frequencies on different days of the week. For example, there can be an occupancy of 80% during the week and 60% on the weekend. In the leisure and business sector, it is more common to look at room occupancy, as there are many single travelers here. In the vacation hotel industry, bed occupancy serves as a better indicator, since one can basically assume two people or more. For this reason, it is important to compare the same types of establishments when making a comparison.

How do I calculate this rate?

The room occupancy rate and the bed occupancy rate are percentage values and indicate how many rooms or beds are occupied in the hotel compared to the total number of rooms/ beds. If there are few incoming bookings and a low occupancy rate, the occupancy rate decreases. If there are many incoming bookings and a high occupancy rate, the occupancy rate increases.

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To calculate the rate, you must first multiply the total number of rooms by the opening days per year. This corresponds to the total capacity. Then multiply the actual overnight stays by 100 and divide this by the total capacity. The result is then rate you are looking for. The bed occupancy rate is calculated in the same way and is also a percentage value. For operational comparisons, you should assume 365 opening days so that the result is not distorted by closing days.

How do I increase the room occupancy rate?

The hotel has 100 rooms and 340 opening days.

100 rooms x 340 = 34,000 rooms per year. In total, the hotel has sold 25,000 rooms in one year.

At full occupancy, i.e. 100% capacity, 34,000 rooms could be sold.

The actual occupancy rate is calculated as follows:

(25,000 rooms x 100) : 34,000 rooms = 73.5%.

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The unique selling proposition and USP

One way is to offer something that no one else has. In the past, that was bowling alleys, and today it’s wellness facilities. This way you can create seasonal independence.

For the majority of German hotels, however, it is not so easy to get a loan from the bank to be able to build a unique selling proposition. Especially smaller hotels in the countryside or even on the outskirts of urban areas can shine, for example, with good service or they have a certain price advantage.

The only problem is that many hoteliers, mostly do not even know where the cost per room sold is in their hotel. As a result, they miss out on important revenue. That’s why one of the most important skills a hotelier needs to master is calculating and budgeting the optimal prices for their rooms. It’s the only way to know if you have room to maneuver, and if so, within what limits. If you understand this, you won’t complain about price dumping, you’ll make the profits you want and become a costing professional.

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Target group analysis

It makes sense to regularly make a target group analysis and to adjust and control the marketing accordingly. If the development of a new target group requires structural changes, you should check in advance whether the profitability is still guaranteed. For the target group research, you should consider various parameters and factors, such as regionality, location, activities, demographics and leisure activities.

Close contact to travel agents and tourist offices

Major events such as trade fairs, concerts, congresses or sporting events lead to high demand at a given time. Hotel businesses far away from the event location can profit from this. Therefore, it is important to have a close and good contact to travel agents and event organizers, so that you can find potential guests and win them as regular customers.

Special offers, arrangements and packages

For periods of low occupancy, offers such as “4 for 3” or packages with included additional services are useful. You can advertise these via direct marketing channels such as the website or travel platforms. In this way, you create incentives to attract additional customers and increase room occupancy. Furthermore, you can also attract regular guests to visit the hotel outside of the season through targeted newsletter marketing and a special price.

Conclusion

It should be the goal for every hotel and hotelier to increase occupancy. However, care should be taken not to do this at any price or room rate. If occupancy increases at the expense of a lower Average Daily Rate, the profit zone can shrink or, in the worst case, even move into the loss zone due to the additional variable costs. Therefore, the hotel should practice revenue management to achieve the optimal revenue at the right occupancy rate. This can be achieved by a good yielding strategy as well as dynamic pricing and a reasonable price optimization. Another advantage is that you also gain regular customers through higher room/bed occupancy, who will book the hotel again for future trips and thus increase the customer lifetime value.

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