Occupancy Is Dead. Measure Utilization Instead.

In the hotel industry, occupancy rate has been the go-to metric for decades. It’s simple: how many rooms are booked overnight? But here’s the problem—it tells you nothing about how your space is actually being used throughout the day.

And that’s a big miss.

Why Occupancy Falls Short

Occupancy only accounts for one thing: whether someone slept in the room. But hotels today are more than places to sleep. They’re hubs for meetings, events, remote work, wellness sessions, pop-ups—you name it.

So if a guest checks out at 10 AM and the room sits empty until the next check-in at 6 PM, you’re at 100% occupancy—but 8 hours of potential revenue just evaporated.

That’s where Utilization Rate comes in.

What Is Utilization Rate?

Utilization Rate looks at how much of your available time a space is actually used.
Here’s the formula:

Utilization Rate = Time Used ÷ Total Available Time

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Example:

• A meeting room is available 24 hours.
• It was booked and used for 18 hours.
• Utilization Rate = 18 ÷ 24 = 75%

Now you’re measuring what matters: actual use, not theoretical availability.

Why It Matters

🔹 Revenue optimization: More usage = more turnover = more revenue per square meter.
🔹 Better ops decisions: Know which spaces are underused and why.
🔹 Smarter design: Invest in spaces that are truly working for your guests.

Utilization is especially useful for:

• Event spaces
• Co-working areas
• Meeting rooms
• Wellness & spa facilities
• Hybrid hospitality setups

TL;DR

Occupancy tells you if a room was booked.
Utilization tells you how much it earned its keep.

If you’re still only tracking occupancy, you’re running blind on a major part of your revenue potential.

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We break it down in the Hotel Metrics Cheat Sheet.

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