Vacancy rate is a key performance indicator in hospitality that measures the percentage of rooms not sold in a hotel or accommodation over a period of time. It’s calculated by dividing the number of unsold rooms by the total number of rooms and multiplying by 100. For example if a 100 room hotel has 20 unsold rooms one night, the vacancy rate would be 20%.
Understanding vacancy rates is crucial for hospitality managers as it directly impacts revenue and profit. A high vacancy rate means the property is not operating at full capacity and is losing money. A low vacancy rate means strong demand and good resource utilisation. Managers use this metric to adjust pricing, plan marketing and make staffing decisions. By tracking vacancy rates over time hospitality professionals can see trends, seasonal fluctuations or the impact of local events and adjust their strategies accordingly.
Let’s say you’re the manager of a boutique hotel in London. At your weekly team meeting you review the vacancy rates for the past month. You see that midweek vacancy rates have been consistently high at 40%. Armed with this information you decide to create a special 'Midweek Break' package with discounted rates and added extras for stays Monday to Thursday. You also contact local businesses to promote your hotel for corporate travellers. After implementing these strategies you track the vacancy rates closely. Over the next few months you see the midweek vacancy rate drop to 25%, increasing revenue and resource utilisation.'