What does occupancy rate indicate for hotels?

Occupancy rate is a crucial metric in the hotel industry that specifically measures how effectively a hotel is utilizing its available room inventory. It is expressed as a percentage and calculated by dividing the number of rooms sold by the total number of available rooms over a specific period. This means that if a hotel has a high occupancy rate, it indicates a strong demand for its rooms, suggesting good business performance and effective marketing strategies.

In contrast to other options, occupancy rate does not directly measure guest satisfaction, average guests per room, or total revenue. Guest satisfaction might relate to service quality and guest experiences which are different from occupancy metrics. The average number of guests per room relates more to demographic insights rather than operational efficiency. Finally, total revenue from stayed guests is a financial metric that encompasses room rates and additional services; it does not directly inform how many rooms are occupied at any given time. Thus, the occupancy rate clearly focuses on the relationship between booked rooms and the total room inventory, making it an essential operational indicator for hotels.