Occupancy Rate
The percentage of available nights that were actually booked in a given period. Formula: (Nights Booked ÷ Nights Available) × 100. One of the three core STR performance metrics alongside ADR and RevPAR.
Definition
What is Occupancy Rate?
Occupancy rate is the percentage of a property's available nights that were booked by paying guests during a given period. It is calculated by dividing the number of booked nights by the nights the property was listed as available (not owner-blocked), then multiplying by 100. STR occupancy is availability-adjusted — a property that blocks 60 nights for personal use has fewer "available" nights, which changes the occupancy calculation versus a hotel that counts all 365 nights as available.
In the STR industry, availability-adjusted occupancy is the more meaningful metric because it measures how effectively a host converts available inventory into revenue. A ski resort market with 65% occupancy over an 8-month season may generate more annual revenue than a beach market with 72% across 12 months, if the ADR differential is large enough. This is why Chalet tracks both raw occupancy and total annual revenue — the combination tells the complete story.
Occupancy rate is heavily seasonal in most STR markets. A beach destination might see 90%+ occupancy in July and under 30% in January. Understanding seasonal occupancy patterns is critical for accurate cash flow modeling. Investors who model with only the annual average often mis-forecast monthly cash flows — which affects debt service coverage, reserves planning, and the decision of when to buy.
Formula
Occupancy Rate = (Nights Booked ÷ Nights Available) × 100
Real-world example
Scenario
A mountain cabin is available 300 nights per year (owner blocks 65 nights for personal use). It books 204 nights.
Calculation
Occupancy Rate = 204 ÷ 300 × 100 = 68%. With a $195 ADR: RevPAR = $195 × 0.68 = $132.60. Annual revenue estimate = $132.60 × 300 available nights = $39,780.
Result
At 68% occupancy this property performs above the typical 55–65% STR range. If the owner added the 65 blocked nights back into availability and maintained the same conversion rate, annual revenue would increase to ~$53,000.
Why it matters for STR investors
Occupancy rate is the primary demand signal for a market. Sustained average occupancy above 65% indicates strong, healthy demand. Consistent readings below 50% signal oversaturation or weak demand — a serious warning sign for new investors entering a market. Always look at 12-month occupancy trends, not just the annual average.
Key points
- STR occupancy is availability-adjusted — owner-blocked nights are excluded
- Unlike hotel occupancy, which counts all 365 nights as available
- Healthy STR market range: 55–70% average annual occupancy
- Below 50% average is a red flag indicating oversupply or weak demand
- Look at monthly distribution, not just the annual average
- High occupancy at low ADR is worse than moderate occupancy at high ADR — calculate RevPAR
