After the onset of COVID-19, hotels are struggling and making general efforts to boost profits by increasing their occupancy rate.
Keeping hotel occupancy rates at an optimum level helps hotel business owners to stay profitable in the long run.
And looking at the average occupancy rate for hotels in 2022, the hospitality industry is optimistic about generating more revenue through increasing occupancy.
Thus, increasing occupancy in hotels is one of the biggest concerns for hoteliers to maintain and stand one step ahead of the competition.
The higher the ]occupancy percentage, the better it is for the hotel. In this article, we will look in more detail at how to calculate occupancy percentage in hotels, factors that affect occupancy rate, and how you can increase it to generate higher revenue.
What Is the Occupancy Rate in Hotel?
The rate is usually derived by calculating how many rooms an average hotel has to the total number of rooms occupied on a particular night.
This is quite important for hoteliers to understand average occupancy in hotels for a longer period. It provides them an insight into the overall profitability by calculating RevPAR i.e., revenue per available room and other operational factors.
Generally, revenue managers use the RevPAR formula to calculate the overall profits and accordingly optimize their further strategy.
Also, it helps business owners to formulate a suitable business strategy and accordingly occupy more rooms per night to generate profitability.
You can examine your hotel occupancy rate weekly, monthly, or yearly, as per the requirement of the business. The higher your occupancy rate, the more your rooms are booked, and the busier the hotel is. But since, Occupancy rate keeps on fluctuating depending on the season, weather, political, and economic conditions, revenue managers must come up with a suitable strategy to derive a better occupancy percentage. Before, you learn how to determine hotel occupancy rate, learn the what is meaning of single and double occupancy rates in hotels, and how the prices are charged accordingly.
How to Calculate Occupancy Percentage in Hotels?
To learn how to calculate occupancy percentage in hotels, you must be aware of two pointers.
The first one is- the total number of rooms that you have on your property, and the second – is how many of them are filled on a given night (including single or double occupancy).
After getting a hold of these two important factors you can simply apply the hotel occupancy formula – the number of rooms booked divided by the total number of rooms at your property (The no. of Rooms Booked/ Total Number of Rooms.)
To understand how to calculate hotel occupancy rate in percentage watch this video in a depth explanation:
Some businesses operating with a bigger chain of hotels and having branches in different areas might use Hotel Occupancy Calculator.
As it is not possible and wise to manually calculate and asses the rate, using a smart solution is the right choice.
This provides them with hotel occupancy rates by month, city, and state, all in an efficient manner. It helps hoteliers with fast and error-free results and also simplifies the whole process
These bigger chains then analyze and evaluate their hotel average occupancy rate according to guest cycle in hotels to further plan and build a suitable business strategy and maximize profits. Based on the results, they might run special promotions, increase their hotel prices, or adopt any other kind of strategy that is suitable for the business.
So, now that you know how to find hotel occupancy rates, let’s further understand why it matters for your hotel.
Why Is Occupancy Rate Important?
The hotel occupancy rate is an important metric to determine the overall health of your hospitality business.
Since hotels are always trying to stay ahead of the competition, attracting more customers and getting more bookings is another strategy to win over.
Occupancy rate is the percentage of rooms occupied at a property at a given time and thus tells us about how many bookings we are attracting over time.
A good hotel occupancy rate tells us how well a hotel can retain its customers without compromising on quality and customer service.
Furthermore, knowing this number can help you better understand important information about your hotel and overcome potential problems to generate more bookings.
Understanding the occupancy stage in hotels is an important tool for hotel revenue management as it provides useful information on revenue generated through available rooms.
Thus, hoteliers must aim for maximum occupancy rates to get the most out of their property and optimize revenue.
How to Increase Occupancy Rates in Hotels?
1. Competitive Pricing
When it comes to hotel competitive analysis, pricing is the most important thing hoteliers need to get right.
Customers are highly price-sensitive irrespective of the field you are working in.
Thus, playing with the pricing to attract more customers is a good strategy to increase the hotel occupancy rate.
Providing competitive pricing can help your hotel increase its occupancy rate and an edge over your competitors.
But to maintain competitive pricing you must be aware of your competitors and their pricing strategy to put your foot forward.
For such purposes, you can use various hotel rate shopping tools that instantly provide you with real-time pricing of your competitors.
One such price intelligence tool is Makcorps – Hotel API that provides pricing data for different hotels.
Using the hotel API can help you instantly track the hotel prices of your competitors and accordingly optimize your pricing strategy to create lucrative offers for your customers.
Watch the video to learn how Makcorps Hotel API works:
2. Attractive Promotions And Packages
Creating attractive promotions and packages offer guests many discounts to entice them to book a stay at the hotel.
This is another wonderful strategy to attract your customers and increase hotel occupancy rates.
Through such attractive packages, you can even lure them to stay for an extended period or travel during off seasons.
Promotions that include any kind of hotel’s free services motivates guests to take advantage of the situation and book their stay at your property.
This gives you an upper edge over your competitors while creating a strong customer relationship. It’s a win-win strategy.
3. Conducting Special Events
Each event organized provides you a chance to upsell additional hotel amenities like rooms, dining options, or leisure activities.
You can even take the advantage of a local event which usually draws guests from all over the world.
Partner with various event sponsors to set up special promotions for booking the hotel at a discounted price.
This provides you with a great marketing opportunity as well as results in an increased hotel occupancy rate.
5. Dynamic Pricing Is The Key
Dynamic pricing strategy is the main tool that every hotel must use for better occupancy rates.
No matter what kind of hotel you have, you must adjust to the change in market conditions as per the demands for better revenue management and increased occupancy.
Through constant hotel pricing monitoring, you can set flexible pricing based on the market demand allowing the hotel to maintain occupancy rates even in the off seasons as well as also with the opportunity to increase revenue generated per room when the demands get high.
6. Increase Occupancy Through Renting
Many people rent hotel services such as gardens, lawn areas, banquet halls, and other such amenities to conduct certain events.
Many couples choose to have intimate weddings and thus rent hotel services for the same.
You can create special packages for such events and increase your occupancy rate through renting.
Also, businesses need big spaces to host parties, conferences, events, and product launches which could further drive a lot of business generated through the opportunity.
By renting the hotel’s facilities and making use of them for different purposes, hotel business owners can successfully increase their mid-week revenue and further overall profits.
7. Target The Right Customers
As a hotel owner, you must be aware of your target customers for a better revenue generation strategy.
For instance, the corporate segment is a good target to increase the occupancy rate midweek.
Furthermore, business clients often return to the same location to conduct their meetings around the year.
This provides you with an opportunity to catch up on loyal customers and maintain your booking rates.
Similarly, targeting families, tourists, and friend groups on the weekends would be the right choice.
Select the right target at the right time to efficiently work on your occupancy strategy.
Factors That Affect Occupancy Rate in Hotels
Both internal and external factors affect occupancy rates in hotels and must be kept in consideration by the revenue manager.
All such factors include –
1. Hotel’s Type And Location
A hotel’s type and location are powerful factors that significantly affect the occupancy rate at a particular property.
If the location of the property is somewhere near the key attractions of that particular area, then there is a high chance that its occupancy rates will be much higher.
Also, people today consider good quality hotels with better amenities and facilities for booking.
So, if your hotel type matches well with the expectations of the guests, then it is likely that you will experience a much higher occupancy rate.
2. Room Rates
Another dimension that reasonably affects your occupancy rate is varying hotel room rates. /
Which is also considered a room-related occupancy cost.
If you keep on with high pricing for rooms, the chances are that you will have a lesser occupancy rate as compared to your competitors. If you don’t want that to happen, use this API to find hotel prices.
Since customers are highly price-sensitive, they prefer booking only in hotels conducting special discounts or offers.
This is why introducing special discounts in the off seasons and lowering the pricing will significantly help in increasing occupancy rates.
3. Online Reputation
Your online reputation makes a significant impact on potential customers and thus affects your occupancy rate.
Travelers are proactive in nature, and thus search for their stay online.
Your online presence and how you engage with your customers can reflect a lot about your brand and can decide whether you will portray a positive image.
Thus, it is important for hotels today to manage a great online reputation to attract major business through such platforms.
4. Availability of Amenities
The different types of amenities available in your hotel can help you lure customers toward your property and thereby aid in higher occupancy.
Possessing amenities such as bigger swimming pools, spa treatments, indoor activities, etc., that provide you an edge over your competitors significantly makes a difference in attracting bookings.
Thus, you can utilize and maintain special amenities and other effective hotel services to keep a pleasant stay experience.
External factors such as seasonal shifting demand is another vital factor that affects your occupancy rates.
For instance, if summers are the best time to travel in your area, then there must remain a higher demand during the summer season.
This further decides and increases your occupancy rate in the peak season.
On the other hand, you might face difficulties in keeping up with the same occupancy rate during off seasons such as in winter.
This fluctuating demand caused by the seasonal shift largely decides the flow of guests.
Frequently Asked Questions:
Here are the things that affect hotel occupancy rates:
- Room Price
- Facilities Guest Requires
- Not Answering Customer’s Queries
- Unclean Room
- Poor Advertising
- Poor Service
- Location ( If far away from the city )
- Low-Quality Equipment In Room
- Staff Behavior
The 6 common problems of hotels are:
- Long lines and fewer staff at the front desk
- Staff unwillingness to serve better
- Bad reviews
- Lack of necessary supplies
- No availability of hotel water
- Bad food
Maximum occupancy of a hotel room is the maximum amount of people who can stay in a room. Generally, the maximum occupancy a hotel room can have is 5.
The reasons for the low occupancy of rooms are:
- Bad marketing strategies
- No availability at OTA platforms
- Bad reviews on OTAs and your Hotel GMB
- Lack of partnership with local attraction
- Poor photography
- High prices than your competitors
For different hotels ideal occupancy rates are different. Mostly, a good occupancy rate for most hotels is around 60%-95%.
According to Amadeus agency 360, global occupancy rates in hotel fluctuates. Usually, in July and Aug global occupancy rate is 67% and in other months it’s 64% on average.
After understanding hotel occupancy rates, how to calculate them, and why they are important, we hope that you will be able to make better revenue management decisions to increase your occupancy rates.
While increasing the occupancy rate is quite important yet hoteliers must not compromise on their optimal price to achieve a higher occupancy percentage.
It’s always better to maintain a balance in your pricing strategy throughout the year to enhance the average daily rate.
Only through such proactive planning, you will be able to get the most out of your property while maximizing your profits.
You can improve your rates by taking note of the above-mentioned strategies such as conducting events, targeting the right audience, releasing special discounts and promotions, and much more.
But before finalizing any particular hotel revenue management strategy, every revenue manager needs to take the different factors into consideration that might affect the occupancy rate in hotels.