Determinants of occupancy rate

1. MOHAMED RASHID NK

2.  This topic is aims to investigate factors
affecting the hotel occupancy rate and
generates an outlook of the industry.
 Some of the factors were identified
exercising significant influences on the hotel
occupancy rate in the destination.
 If an apartment building contains 20 units, 18
of which have renters, it has a 90%
occupancy rate. Similarly, a 200-room hotel
with guests in 150 rooms has a 75%
occupancy rate.

3.  Occupancy rate are considered of utmost
importance for the hotel’s management in
general, and for sales department in particular.
 The occupancy rate is the ratio between the no
of occupied rooms and the no of rooms offered
by the hotels that are open.
 The occupancy rate shows the ratio of the no
of occupied rooms to the total no of rooms in
hotels , whether open or closed.

4.  The existence of occupancy rate that are less
than the hotel capacity means that there are
lost selling opportunities , which leads to
depletion in hotel revenue.
 Therefore , many hotels with low occupancy
rates prefer to continue to function normally
in non-peak times.
 If the demand for the hotel services exceeded
the hotels capacity , this means that the hotel
occupancy rate reached its maximum rate.

5.  Occupancy rate is influenced by many factors
that are as follows:-
1) average room rate.
2) total available hotel rooms.
3) tourist arrival.
4) star rating.
5) seasonality.

6. 1) Average room rate:- hotel managers treat
occupancy rate and ARR as the two major
indicators of the hotel performance.
ARR is calculated as total room revenue
divided by no of rooms sold.
It is possible to report on a daily and a
monthly basis.
2) total available hotel rooms and tourist
arrival :- TAR and TA impact the market
equilibrium of the hotel industry.
So TAR and TA has significantly
influencing on the hotel
occupancy rate.

7. 3) star rating:- The star rating of the hotel has
played an significant influence on the
hotel occupancy rate.
4) seasonality:- seasonality differs from
country to country. so it has significant
influence on the hotel occupancy rate.

8.  Occupancy rate is influenced by many factors
regardless of the seasonality and other fixed
factors.
 Hotel characteristics (hotel location, size,
no. of rooms) have an impact on hotels
occupancy rate.
 Hotels internal factors(service quality, room
facilities,prices,employees attitudes and
cleanliness)have an impact on the occupancy
rate.
 Hotel external factors(economic status,
exchange rate, political situation, intensive
competition) have an impact on the
occupancy rate.

9.  The occupancy rate of hotels is the share of an
establishment’s available rooms that are
occupied at a given time.
 Three of the most important hotel
performance indicators are the Average
Daily Rate (ADR), the revenue per available
room (RevPar), and the occupancy rate.
 In 2015, Europe had the highest hotel
occupancy rate worldwide at 70.1 percent,
followed by the Asia Pacific region at 68.2
percent.

10.  The Middle East and Africa had the lowest rate at
62.9 percent. In terms of average daily rates,
however, the Middle East and Africa was by far the
most expensive region at almost 160.11 U.S.
dollars, followed by Europe at 126.97 dollars.
 The revenue of the global hotel industry was
expected to reach 550 billion U.S. dollars by 2016.
 In the United States, the hotel industry generated
176.7 billion U.S. dollars in revenue in 2014. That
year, the occupancy rate of U.S. hotels was 64.4
percent and the average daily rate was around
113 U.S. dollars.

11.  The most expensive U.S. city for hotels in
2014 was New York with an average daily
rate of 271 U.S. dollars. Honolulu placed
second with 220 dollars. The hotel chain with
the largest number of properties in the U.S.
was Holiday Inn Express, owned by
InterContinental Hotels, with just short of
two thousand hotels.

12.  Hotel occupancy in India surpassed 60% for
the first time in four years.
 The occupancy rate grew to 60.3% during the
financial year, up from 58.6%.

15.  Every hotel has to set different strategies to
raise their occupancy rate such as reducing
their room’s rate.
 In low season in particular ,creating special
promotional programs for local citizens to
consume hotel services, and finally targeting
new markets with new marketing strategies
that can attract tourists.

16.  International encyclopedia of modern
hospitality and tourism management .
 www.statista.com

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