In the business of selling accommodation, filling rooms is necessary for success and long-term profitability. For a hotel manager, there are some important KPIs to stay informed about. The occupancy rate is one of these indicators, and, together with the revenue generated, they demonstrate the current situation of the business. It is normal to have variations in demand according to the various seasons throughout the year, but maximizing occupancy is key to being able to deal with these fluctuations.

Just reducing the prices can improve occupancy temporarily, but in the long run, the drop in revenue generated may not be enough to cover minimum operating costs.

In this article, Hey!Travel explains the main concepts and some tips that can help you boost your hotel occupancy rate!

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What is Occupancy Rate and why is it important?

Hotel occupancy rate is the percentage of rooms occupied at a given time compared to the total number of rooms available at that same time. This rate can be analyzed by day, week, month, or year and it may vary according to the time of year.

This indicator is calculated by dividing the total number of sold rooms by the total number of available rooms, times 100.

(total number of rooms sold / total number of rooms) * 100 = Occupancy Rate (%)

For example, if a hotel has 70 rooms and on a given day, 56 of those same rooms were occupied, it means that the occupancy rate for that day is 80%.

The occupancy rate is of particular interest in the scope of revenue management. Hotel managers must ensure that occupancy is maximized so that they can make the most of the business as well as increase the revenue generated.

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Strategies to improve Occupancy Rates

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1. Pay special attention to online reputation

Studies say that 81% of people frequently or always read reviews before booking a hotel, so having good reviews on TripAdvisor, Booking.com, Google, or other platforms is good and can be the key for guests to choose booking on your hotel instead of other.

What can be not so good are bad reviews… You can’t control what people write on the internet. Still, you control what you decide to do with that information, and how you want to position your hotel business.

You can see the bad reviews from two perspectives that can complement each other: 

- As drivers to improve certain areas of your hotel operation and, of course, the guest service.

- As opportunities to engage with customers and offer a more tailored service through a personalized response to the bad review.

According to Expedia, 91% of travelers appreciate when property owners respond to negative reviews, therefore, responding promptly with a solution or an apology can make a difference!

Don’t forget that it’s also possible to combat these negative mentions about your hotel, by using actively social media or other digital media to communicate improvements in guest service, positive guest experiences, partnerships, events, and what best suits your hotel identity. Be creative!

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2. Applying length of stay (LOS) restrictions

If you want to increase the occupancy rate and consequently the revenue generated, the strategy of imposing restrictions related to the length of stay may be something to consider since it is one of the best ways to increase your occupancy rate.

There are three types of length-of-stay restrictions.

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- Closed to Arrival (CTA)

This restriction is used to close days from reservations in which check-in is on a particular day. In other words, a guest trying to book a room for that day will see the room as unavailable. Yet, it is possible to book that same room by changing the dates since it allows guests to stay through from previous nights.

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- Maximum Length of Stay (MaxLOS)

This restriction limits the availability of rooms by defining the maximum number of nights a guest can book for stays. If you know that there are guests that may book several nights at your hotel that extend into a high-demand period, you can apply this restriction policy.

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- Minimum Length of Stay (MinLOS)

This restriction is implemented when a hotel faces a high-demand period, following a lower one. What this restriction does is that it only accepts longer stays and rejects shorter stays for these periods, to increase the occupancy rate in low-demand periods.

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3. Offer promotions and special packages

Promotions or special packages act as a mask for the actual prices of the rooms while giving guests the idea that they are saving money.

Special packages can include spa treatments, decorations for honeymooners, or excursions, making it seem like the customer is paying less for a room-plus-experience combination. Don't forget that despite reducing the price for these promotions and special packages, it is necessary to ensure that there is still a margin to make some money while maximizing room occupancy.

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4. Invest in guest service

When you offer flawless guest service that guests won’t forget, you are increasing the chances of them returning and staying with you again in the future.

Therefore, investing in a guest service able to satisfy customers can make them feel unique. This investment can be made through the training of human resources, but also in the adoption of technological systems that work to strengthen the relationship with the client.

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5. Adjust your pricing strategy to seasonal demand

Regardless of your hotel's category and typology, pricing strategy has a big impact on revenue. Some adjustments can be made according to the occupancy forecasts, by season.

Therefore, continually reviewing prices and adapting them under the principles of demand and supply can be useful. That is, prices should be higher when demand is higher to maximize the Average Daily Rate (ADR) and lower when demand is lower to boost hotel occupancy rates.

Pondering a strategy that maximizes the hotel's occupancy rate can, and should, involve the use of highly prepared technological systems to assist in developing the hotel business.

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How can Hey!Travel help you increase occupancy?

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Hey!Travel has the ability to assist you with expansion into new markets while centralizing all your inventory. Setting room rates and restrictions in a single place and for specific channels helps you save time and focus on the most important thing: serving the customer well.

If you haven't paid attention to your online reputation or the benefits of being present on metasearch engines, like Google Hotel Ads, you may not fully maximize occupancy.

Hey!Travel’s solutions were developed to solve the current problems and help hotels adapt to the challenges of the moment so that hotel managers can benefit from a cloud-based platform that is 100% oriented towards the direct distribution of hotels.

Get to know more about our solutions!

Book a demo.