Financial Glossary
Occupancy Rate
Occupancy rate is the percentage of available capacity that is actively generating revenue during a given period, calculated as occupied units divided by available units multiplied by 100. For hotels, the unit is a room-night; for campgrounds and RV parks, a site-night; for marinas, a slip-day; for self-storage, a rentable square foot. The denominator is available capacity -- total sites or units multiplied by days in the period -- not just the units listed for rent. A property under renovation or taken offline for maintenance should be excluded from the denominator to avoid understating true occupancy. Occupancy rate is one leg of the RevPAR (Revenue Per Available Unit) identity: RevPAR equals ADR multiplied by occupancy rate.
Problem & Application
A 120-site RV park operates for a 30-day month, yielding 3,600 available site-nights. Of those, 2,700 are occupied, producing an occupancy rate of 75%. At an ADR of $55, RevPAR is $41.25. A competing park runs 90% occupancy but at an ADR of $42, producing RevPAR of $37.80 -- lower despite higher occupancy. This illustrates why chasing occupancy through aggressive discounting often destroys more revenue than it creates. Segmenting occupancy by site type (full hookup versus tent versus cabin) and booking channel (direct versus OTA versus repeat) reveals which segments fill first, which respond to discounts, and which carry higher ancillary spend. Operators use this segmentation to set dynamic pricing that protects rate on high-demand weekends while accepting lower ADR to fill shoulder days rather than leaving them empty.
In Short
Occupancy rate quantifies demand; balanced against rate, it sets a property's revenue ceiling.