Occupancy rate

Occupancy rate measures what portion of a fixed, sellable capacity, hotel rooms, rental apartments, parking spaces, or similar inventory, is actually occupied during a period rather than sitting empty. It is one of the most basic supply-utilization metrics in any business built around fixed physical capacity.

The formula is occupied units / total available units × 100 over the period measured, whether that is a single night, a month, or a year. In hospitality it is one of the two inputs to revenue per available room, alongside average daily rate; in real estate it is a direct input to income calculations behind metrics like capitalization rate. Occupancy alone says nothing about the price charged for the occupied space, which is why it is rarely reported without a companion rate metric.

Operators use occupancy rate to gauge demand, plan staffing and maintenance, and as a lever in revenue management: a property willing to accept a lower rate to keep occupancy high behaves very differently from one that protects rate at the cost of some empty inventory. A common pitfall is treating a high occupancy rate as unambiguously good; if achieved only through steep discounting, it can coincide with weak revenue and thin margins, so occupancy should always be read alongside rate and revenue figures.