Financial Metrics · Basic level · 3 min read ·
What is Monthly Occupancy?
Monthly occupancy is the percentage of available nights that were sold in a month. If an apartment had 30 nights to sell and 24 were booked, its occupancy was 80%. It is the first signal of a lodging asset's demand: it shows how much it is used, not at what price.
In 30 seconds
- Occupancy = nights sold ÷ nights available × 100.
- It tells you how much was sold, not at what price or how much was left.
- It is read together with ADR and RevPAR, and by season.
Why should you care?
A night that isn't sold can never be recovered. That's why occupancy is the starting point for understanding how a lodging business is doing.
- You see whether demand for the asset is growing, holding or falling.
- You recognize each destination's high and low seasons.
- You understand the first of the two levers of revenue: how much is sold.
Think of it as the seats in a movie theater
A theater has 100 seats per showing. If 70 tickets are sold, the room was 70% full. The empty seats from that showing can't be sold later. Occupancy measures the same thing for a lodging asset, night by night.
How does monthly occupancy work?
- 1
Count the available nights
Number of units times nights in the month: 4 apartments in a 30-night month are 120 nights.
- 2
Count the nights sold
The nights a unit was occupied by a guest who paid for the stay.
- 3
Divide and multiply by 100
Nights sold divided by nights available gives the month's occupancy percentage.
- 4
Compare equivalent months
A December is compared with another December, not with a February.
The formula
Occupancy = Nights sold ÷ Nights available × 100
- Nights sold
- = nights occupied by guests in the month
- Nights available
- = units × nights in the month
An example with numbers
Illustrative figures for a building with 4 short-stay apartments in a 30-night month, unrelated to any project.
| Apartments | 4 |
|---|---|
| Nights available | 120 |
| Nights sold | 96 |
| Monthly occupancy | 80% |
Out of every 10 available nights, 8 were sold. How much those nights brought in depends on the rate: that's where ADR comes in.
Where do you see it at Circular Urban?
On the sheet of each lodging project in operation, the «How the operation is going» section shows average occupancy. In your portfolio, each participation's detail shows it month by month, next to ADR and RevPAR. These are figures from the actual operation, and they change with the season.
- The sheet of projects in operation, in «How the operation is going»: Average occupancy.
- Your portfolio, in each participation's detail: Monthly Occupancy.
What changes in your finances once you get it
You read demand
You know whether an asset is being used before looking at what it leaves.
You compare with judgment
You compare equivalent seasons and don't worry over an expected low month.
You don't stop at one number
You know that high occupancy at a very low price can bring in less revenue.
Common mistakes
- Myth
The goal is 100% occupancy every month.
- In reality
Filling everything at any price can lower revenue. The aim is the best balance between occupancy and rate.
- Myth
More occupancy always means more revenue.
- In reality
If the rate falls more than occupancy rises, revenue can drop. That's why RevPAR is checked too.
- Myth
A month of low occupancy means something is wrong.
- In reality
Lodging businesses have seasons. A low month in low season is part of the pattern.
Test yourself
A project with 5 apartments sold 120 nights in a 30-night month. What was its occupancy?
Keep learning
Helps to know first
What comes next
This content is educational. Every participation carries risks inherent to the project, including the possibility of partial or total loss, and results are subject to each project's actual performance.
