Restaurants, hotels and travel
Occupancy rate
The share of available rooms (or beds) that are filled over a period.
Facts checked against sources onWhat does Occupancy rate mean?
Occupancy is rooms sold divided by rooms available in a period. Example: a 200-room hotel sells 150 rooms tonight, so occupancy is 75 percent. Over a 30-day month it has 6,000 room nights available, and if it sells 4,800, occupancy for the month is 80 percent. High occupancy at low prices can be worse than lower occupancy at higher prices, so hotels judge performance with RevPAR, which combines occupancy with average daily rate. The same idea appears as bed occupancy in hospitals and as load factor in airlines.
Where does it come up in case interview prep?
- Crack any case in five movesLesson in What a case interview is, and how to prepare
- Lean basics as economics: waste, flow, and the hidden cost of inventoryLesson in Making operations better, and planning for what can go wrong
- How hospitals and insurers make money: costs, unit economics and operationsLesson in Healthcare providers and payers
- Main players, trends 2024 to 2026, regulation and casesLesson in Healthcare providers and payers
- How hotels and travel companies make moneyLesson in Hotels and travel
- RevPAR and hotel economicsLesson in Hotels and travel
- Hotel and travel players, trends, and how to crack the casesLesson in Hotels and travel
- Construction and real estate players, trends 2024 to 2026, and how to crack the casesLesson in Construction, real estate and infrastructure
Related terms
- ADR (average daily rate)The average price paid per hotel room sold.
- RevPAR (revenue per available room)Rooms revenue divided by all rooms available: occupancy times ADR.
- Load factorThe share of seats filled with paying passengers: RPK divided by ASK.
- Capacity utilizationActual output as a share of the most that could be produced.
- Prime costFood and drink cost plus labour cost, the two biggest restaurant costs.
- Table turnsHow many times each table is used by a new group in a meal period or day.
- CoverOne guest served a meal: the unit restaurants count.
- Same-store sales (comparable sales)The US name for like-for-like sales: growth at restaurants or stores open in both periods.
Learn it in context
See Occupancy rate at work in a lesson from What a case interview is, and how to prepare, with checks as you go.
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