Occupancy rate is a key performance indicator (KPI) for the hotel and vacation rental property industries. Property managers use this indicator to measure the health and performance of their businesses. 

Calculating your occupancy rate for a given period of time is as simple as dividing the number of units available by the number of units occupied. However, there’s a little bit more to know about occupancy rate tracking, such as its proper usage and why it’s so beneficial.

Let’s start with some occupancy rate calculation examples.

Example Occupancy Rate Calculation

The occupancy rate KPI is calculated as a percentage figure. If your vacation property business consists of 50 units, and 50 of them are currently occupied, your occupancy rate is 100%. If only 25 rooms are occupied, then your occupancy rate is 50%.

For clarity, let’s write this formula out:

  • Occupancy Rate Formula: Total Occupied Units / Total Units = Occupancy Rate
  • Occupancy Rate Example: 300 Occupied Units / 520 Total Units = Occupancy Rate of 58%

Occupancy Rates in Action

Of all the performance indicators in the hotel and vacation property management industry, occupancy rate is one of the most useful for determining the success or failure of your management strategies. Nevertheless, there are a few things you should know about making practical use of this metric. 

For example, Statistica reports that the average hotel occupancy rate in North America was 62% as of November 2019. You might assume that 62% sounds like a low and unprofitable figure, but let’s consider it in context.

Although it seems logical that vacation property managers should try to achieve the highest occupancy rate possible—because the more units they rent, the more money they’ll earn—you can’t take occupancy rate out of context. 

Since the end goal is revenue maximization, you always need to consider if you had to lower rental fees to increase your occupancy rate—and if so, did that result in decreased revenue figures? Could raising your rental fees cause a lower occupancy rate while generating higher revenues?

There are many cases in which a vacation property renter can earn more money with a lower occupancy rate by increasing rental fees. Another advantage comes from this: You’re more likely to have units for last-minute guests. 

PointCentral: Advanced KPI Tracking for Vacation Rental Property Businesses

At the end of the day, each vacation management company needs to experiment with pricing and occupancy rates to determine their most advantageous figures. However, tracking your business figures for the most accurate metrics and KPIs isn’t easy, and as your business grows, the task becomes more complicated. 

This is where PointCentral’s smart vacation property management tools can help. PointCentral’s advanced property intelligence, that has been out of reach of most hospitality providers, can allow you to leverage technology to gain key business insights and make better, more informed decisions. If you’d like to learn more about our advanced property management technology, contact the PointCentral team for a free demonstration.