Average occupancy is a key performance indicator in the hospitality industry that measures the percentage of available rooms or seats that are occupied over a period of time. It's calculated by dividing the number of occupied rooms or seats by the total number of available rooms or seats and then multiplying by 100. For example, if a hotel has 100 rooms and 75 are occupied, the average occupancy is 75%.
This is useful for hospitality managers as it gives insight into how well a property is using its capacity. High average occupancy rates mean strong demand and good marketing, while low rates indicate that you need to look at pricing or promotions. By tracking this over time, you can see patterns, adjust and make informed decisions on staffing, maintenance, and expansion.
Let's say you are the manager of a busy restaurant with 50 seats. Over the past month, you have noticed your dinner service average occupancy is only 60%. You introduce a new happy hour menu and live music on weeknights. After implementing these changes, you track the average occupancy for the next month and it's 80%. This shows your new initiatives have worked and brought in more customers, improving your restaurant's performance.