# Hotel occupancy rate formula: how to calculate it, with a worked example

> Occupancy is the first number most owners look at each morning. Here is the formula, the counting rules that keep it honest, and a worked month for a 20-room hotel and a hostel.

- URL: https://guesthawk.com/guides/hotel-occupancy-rate
- Category: Revenue
- Tags: Revenue management, Pricing, Front desk
- Published: 11 November 2026
- Updated: 11 November 2026
- Publisher: GuestHawk (https://guesthawk.com)

Ask any hotel owner how business is and the first answer is usually a percentage: "we were at 70 last month". That number is the occupancy rate, and the **occupancy rate formula** behind it is simple. What trips people up is the counting: which rooms are "sold", which are "available", what to do with the owner's cousin who stayed free, and how a hostel with 48 beds should count at all. This guide gives you the formula, the counting rules, and a worked month for a 20-room hotel that the other guides in this series use too. It is written for small and mid-sized properties: independent hotels, homestays and hostels, where the owner often works the numbers out by hand or from a spreadsheet, and where a counting mistake can make a slow month look fine.

## The occupancy rate formula

Occupancy is the share of the rooms you could have sold that you actually sold.

> **The formula**
>
> Occupancy rate = rooms sold ÷ rooms available × 100

For a single night, that is easy. A 20-room hotel that sells 13 rooms on Tuesday night is at 13 ÷ 20 × 100 = **65 per cent** for that night.

For a week, a month or a year, you count **room-nights**: one room for one night. A 20-room hotel open for a 30-day month has 20 × 30 = 600 room-nights available. Every night a room is sold adds one room-night sold.

The same counting feeds the two numbers that usually sit beside occupancy on an owner's report:

- **Average daily rate (ADR)** = room revenue ÷ rooms sold. It tells you the average price you got for each room you sold. See our guide to [ADR in hotel reports](https://guesthawk.com/guides/adr-in-hotel).
- **Revenue per available room (RevPAR)** = room revenue ÷ rooms available. It combines occupancy and rate into one number. See [what is RevPAR](https://guesthawk.com/guides/revpar).

Keep the counting identical across all three and they will always agree: occupancy × ADR = RevPAR.

## How to calculate occupancy rate, step by step

1. **Fix the period.** One night, a week, a calendar month or a financial year. Use the same business date cut-off your night audit uses, so a guest who checks in at 1 am lands on the right night.
2. **Count rooms available.** Number of rooms × number of nights in the period.
3. **Count rooms sold.** Add up paid room-nights from your guest bills or end-of-day close reports, not from bookings, since bookings include no-shows and cancellations.
4. **Divide and multiply by 100.** Round to one decimal place at most. Nobody manages a hotel on the second decimal.
5. **Write down the conventions you used** (below), so next month's figure is counted the same way.

If you close the day properly every night, steps 2 and 3 are already done for you. Our [night audit process](https://guesthawk.com/guides/night-audit-process) guide covers that routine.

## What counts as sold, what counts as available

Most arguments about occupancy are really arguments about counting. Settle these once, write them on the report, and do not change them mid-year.

| Situation | Rooms sold? | Rooms available? | Why |
| --- | --- | --- | --- |
| Paid stay, any channel | Yes | Yes | The normal case. |
| Complimentary room (owner's guest, OTA inspection, staff stay) | No | Yes | No room revenue was earned. Report comp rooms as a separate count. |
| No-show charged one night | Count as sold only if you post the room charge | Yes | Follow what your night audit posts. Be consistent. |
| Day-use room (a few hours, no night) | No, track separately | Yes | It is not a room-night. Its revenue still goes into room revenue. |
| Room out of order for a day or two (AC repair, leak) | No | Yes | A short repair is part of running the hotel. |
| Room closed for a long renovation | No | Can be removed, with a note | Write the change on the report so months stay comparable. |
| House use (manager lives in a room) | No | Remove if permanent | A room that is never for sale is not inventory. |

The convention in this guide, and in our guides to [ADR](https://guesthawk.com/guides/adr-in-hotel) and [RevPAR](https://guesthawk.com/guides/revpar), is: **rooms sold means paid room-nights only, and complimentary rooms are excluded** from occupancy, ADR and RevPAR alike. Industry benchmark reports also leave complimentary rooms out of rooms sold. If you want to see how many rooms went free, show a second line, "occupancy including complimentary rooms", clearly labelled.

> **Do not shrink rooms available to look busier**
>
> Taking out every room that had a small problem flatters occupancy and hides a maintenance issue. Keep short repairs in rooms available and fix the room.

## A worked month for a 20-room hotel

The figures below are illustrative. They are the same hotel used in our ADR and RevPAR guides, so you can follow one month across all three numbers.

A 20-room hotel in Mysuru, November (30 nights):

| Item | Count |
| --- | --- |
| Rooms | 20 |
| Nights in the month | 30 |
| Rooms available | 20 × 30 = **600 room-nights** |
| Paid room-nights sold | **390** |
| Complimentary room-nights (owner's family, one OTA inspection) | 6 |
| Room revenue, excluding GST | **₹9,36,000** |

Now apply the formulas:

- **Occupancy** = 390 ÷ 600 × 100 = **65 per cent**
- Occupancy including complimentary rooms = 396 ÷ 600 × 100 = 66 per cent (shown as a separate line)
- **ADR** = ₹9,36,000 ÷ 390 = **₹2,400**
- **RevPAR** = ₹9,36,000 ÷ 600 = **₹1,560**, which is also 65 per cent × ₹2,400

Notice what the month does not tell you. A 65 per cent month can be 95 per cent every weekend and 50 per cent on weekdays. Look at occupancy by day of week before you decide anything about price.

### By day of week

| Night | Nights in November | Rooms sold | Occupancy |
| --- | --- | --- | --- |
| Friday and Saturday | 8 | 144 | 90 per cent |
| Sunday to Thursday | 22 | 246 | 55.9 per cent |
| Whole month | 30 | 390 | 65 per cent |

The weekend is nearly full; weekdays carry most of the empty rooms. That is a weekday problem to solve with corporate rates, packages or travel agents, not a reason to cut the weekend rate.

## Bed occupancy for hostels and dorms

A hostel sells beds, so room occupancy hides what is really happening. A dorm of eight beds with two guests in it is "occupied" as a room but 25 per cent full as beds.

> **Bed occupancy**
>
> Bed occupancy = beds sold ÷ beds available × 100

Count bed-nights the same way you count room-nights. An illustrative hostel with 40 dorm beds and 4 private rooms, in a 30-day month:

| Inventory | Available | Sold | Occupancy |
| --- | --- | --- | --- |
| Dorm beds (40 beds × 30 nights) | 1,200 bed-nights | 900 | 75 per cent |
| Private rooms (4 rooms × 30 nights) | 120 room-nights | 84 | 70 per cent |

Keep the two lines separate. Adding beds and rooms into one number mixes a ₹700 bed with a ₹2,500 room, and the result means nothing. Some hostels also track women-only dorms on their own line, because they fill differently from mixed dorms.

A few hostel-specific counting rules:

- A bed blocked for a group but not paid for is not sold.
- A private room sold to one guest counts as one room-night, whatever its bed count.
- If you sell a whole dorm to a group, count every bed in it as sold, since nobody else could use them.

Our guide to [running a hostel in India](https://guesthawk.com/guides/running-a-hostel-in-india) covers dorm planning in more detail.

## Reading occupancy without fooling yourself

Occupancy is a volume number. It tells you how many rooms you sold, not how much money you made. Four habits keep it useful:

- **Always pair it with rate.** 80 per cent at ₹1,800 earns less room revenue than 65 per cent at ₹2,400 on the same 600 room-nights (₹8,64,000 against ₹9,36,000). That is why owners track [RevPAR](https://guesthawk.com/guides/revpar).
- **Compare like with like.** This November with last November, not with October. Festivals, weddings and school holidays move between months.
- **Look forward, not only back.** Occupancy on the books for the next 30, 60 and 90 days tells you whether to hold or move your rate. That is the heart of [hotel revenue management](https://guesthawk.com/guides/hotel-revenue-management).
- **Watch the channel mix.** High occupancy that came mostly through OTAs at a commission may earn less than it looks. Our guide to [cutting OTA commission](https://guesthawk.com/guides/cutting-ota-commission) shows the cost for this same 20-room size.

## Common counting mistakes

These are the errors we see most often when an owner's occupancy does not match the bank account.

- **Counting bookings instead of stays.** A booking made and then cancelled, or a guest who never arrived, is not a room-night sold unless you actually charged for it. Take the count from the closed days, not from the booking list.
- **Counting guests instead of rooms.** A family of four in one room is one room-night. Guest counts matter for the guest register and for breakfast, not for occupancy.
- **Double counting extensions and room moves.** A guest who moves from room 104 to room 210 at noon still occupied one room that night. Count the room the night was charged to.
- **Mixing calendar date and business date.** A walk-in at 1:30 am belongs to the business date your day close is still open on. If the front desk counts by the clock and the owner's report counts by business date, the two will never match.
- **Changing the rules quietly.** Dropping complimentary rooms one month and including them the next makes the trend line meaningless. If you change a convention, note it and restate the previous months the same way.
- **Averaging percentages.** The occupancy for a month is total room-nights sold ÷ total room-nights available. It is not the average of 30 nightly percentages, which goes wrong as soon as rooms available changes during the month, for example when a renovated wing reopens.

### Occupancy across a year

For an annual figure, add up room-nights sold for the whole year and divide by room-nights available for the whole year. A 20-room hotel open all 365 nights has 7,300 room-nights available. If a wing of five rooms was closed for three months of renovation, take those 5 × 90 = 450 room-nights out, write that on the report, and divide by 6,850 instead. The same rule applies to a seasonal property in the hills that closes for the monsoon: count only the nights you were open for sale, and say so.

## A monthly occupancy checklist

Run this on the first working day of each month. It takes ten minutes if your day close is in order.

1. Confirm every night of the month was closed, with no open business dates.
2. Take paid room-nights sold from the end-of-day close reports.
3. Note complimentary room-nights separately, with a reason for each.
4. Note any room taken out of rooms available, with the dates and the reason.
5. Calculate occupancy for the month, and for weekdays and weekends separately.
6. Put it beside ADR and RevPAR, worked out from the same counts.
7. Compare with the same month last year, and note anything unusual (a wedding block, a road closure, a festival that moved).
8. Look at what is already booked for the next 90 days, by week.

## Where GuestHawk fits

GuestHawk's [daily owner digest](https://guesthawk.com/platform#finance) sends revenue, occupancy, rate and cash every morning, and the [front desk](https://guesthawk.com/platform#front-desk) tape chart counts rooms and beds as first-class inventory, which suits [hostels](https://guesthawk.com/solutions#hostels) as well as [hotels](https://guesthawk.com/solutions#hotels).

## Frequently asked questions

### What is the occupancy rate formula for a hotel?

Occupancy rate = rooms sold ÷ rooms available × 100. For one night, a 20-room hotel that sells 13 rooms is at 65 per cent. For a month, multiply rooms by nights first: 20 rooms × 30 nights = 600 room-nights available.

### Do complimentary rooms count in occupancy?

In this guide's convention, no. Rooms sold means paid rooms only, so complimentary rooms are left out of occupancy, ADR and RevPAR alike. Many properties also show an occupancy figure that includes them, labelled clearly, so the owner can see how many rooms went free.

### How do I calculate occupancy for a hostel?

Count beds, not rooms. Bed occupancy = beds sold ÷ beds available × 100. A hostel with 40 dorm beds has 1,200 bed-nights in a 30-day month; selling 900 of them is 75 per cent. Track private rooms separately in room-nights.

### What is a good occupancy rate for a small hotel in India?

There is no single answer, because location, season and your rate all change it. Compare yourself with the same month last year and with similar properties nearby, and always read occupancy next to your [average daily rate](https://guesthawk.com/guides/adr-in-hotel), since high occupancy at a low rate can earn less than fewer rooms at a better rate.

### Should out-of-order rooms be removed from rooms available?

Keep every room in rooms available unless it is closed for a long repair or renovation. If you take a room out, write that on the report, otherwise your occupancy looks better than it really is and cannot be compared with last year.

## Sources

- [STR: How to read a STAR report](https://str.com/sites/default/files/2019-07/how-to-read-star-report.pdf)
- [STR: Hotel profit and loss glossary](https://str.com/sites/default/files/profit-and-loss-glossary.pdf)
- [CoStar STR Benchmark: glossary of hotel performance terms](https://www.costar.com/products/str-benchmark/resources/glossary)