Occupancy

What is the room occupancy rate?

Room occupancy and bed occupancy are percentages 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 number of occupancies, utilization decreases. With many incoming bookings and high occupancy rates, utilization increases.

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How do I calculate room occupancy?

To calculate room occupancy, you must first multiply the total number of rooms by the opening days in the 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 occupancy. The calculation of bed occupancy is carried out analogously and is also a percentage value. When comparing companies, you should expect 365 opening days so that the result is not falsified by closing days.

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Example invoice

The hotel has 100 rooms and 340 opening days.

100 rooms x 340 = 34,000 rooms per year. The hotel sold a total of 25,000 rooms in one year.

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

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The actual workload is calculated as follows:

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

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How do I increase room occupancy?

There are various strategies for hotels to increase their room occupancy. The most important point is to analyze the periods of high and very low room occupancy. You need to find out what average occupancy rate your hotel business needs to reach in order to achieve your business goals. It is also important whether, if the house is fully occupied for a longer period of time, it can be operated with enough staff at all. Many hotels depend on seasons, trade fairs or vacation periods. There is often a high level of utilization/occupancy at these times, as demand in the market is very high. The aim is therefore to increase capacity utilization during periods of low demand and difficult economic situations. There are many factors and adjustments that can influence capacity utilization. The guest experience and hotel quality are therefore of great importance. There are various ways to do this.

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The unique selling point and USP

One option is that you offer something that no one else has. Once upon a time, these were bowling alleys and today they are wellness facilities. This is how you can give yourself seasonal independence.

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For the majority of German hotels, however, it is not so easy to obtain a loan in the bank in order to be able to build a unique selling point. Smaller hotels in the countryside or on the outskirts of urban areas in particular can shine with good service, for example, or they have a certain price advantage.

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The only problem is that many hoteliers usually do not even know where the cost contribution per room sold is in their hotel. As a result, they miss out on important income. That is why one of the most important skills that a hotelier must master is to find the optimal prices for their rooms calculate and to budgeting. This is the only way to know whether and within what framework you have leeway. Anyone who understands this does not complain about price dumping, but makes the profits they want and becomes a calculation professional.

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Target group analysis

It makes sense to regularly carry out a target group analysis and to adapt and manage marketing accordingly. If structural changes have to be made as a result of opening up the new target group, you should check beforehand whether this will continue to guarantee profitability. For target group research, you should consider various parameters and factors, such as regionality, location, activities, demographics and leisure activities.

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Close contact with travel agents and tourist offices

Major events such as trade fairs, concerts, conferences or sports events generate great demand at a certain point in time. Hotels far away from the event venue can benefit from this. It is therefore important to have close and good contact with travel agents and tour operators so that you can find potential guests and attract them as regular customers.

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Special offers, arrangements and packages

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

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Conclusion

It should be the goal of every hotel and hotelier to increase utilization/hotel occupancy. However, you should be careful not to do this at every price and every room rate. Does utilization increase at the expense of lower Average daily rate, the profit zone can shrink or, in the worst case, even move into a loss zone due to the additional variable costs. That is why the hotel should Revenue Management operate in order to achieve optimal sales at the right workload. You can do this a good Yielding Strategy as well as Dynamic pricing and a meaningful price optimization achieve. Another advantage is that higher room and bed occupancy also gives you regular customers who book the hotel again for future trips and thus increases the customer lifetime value.

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