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Occupancy Rate

Source: Investopedia
This Article has been Edited for Accessibility

Occupancy Rate

What is the 'Occupancy Rate'

Occupancy rate refers to the ratio of rented or used space compared to the total amount of available space. Analysts use the phrase occupancy rates when discussing senior housing, hospitals, bed-and-breakfasts, hotels and rental units, among other categories. In a call center, occupancy rate refers to the amount of time agents spend on calls compared to their total working hours. Next Up Occupational Labor Mobility Occupational Safety And Health ... Average Daily Rate - ADR Vacancy Rate

Explaining 'Occupancy Rate'

To illustrate, 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. Conversely, the vacancy rate is the number of units in a building that are not rented out as compared to the total number of units in the building.

Occupancy Rates and Real Estate Investors

Occupancy rates are important to real estate investors because these numbers provide an indication of anticipated cash flows. A commercial real estate investor looking for a shopping center to is likely not interested in one that only has a 25% occupancy rate, meaning that tenants were leasing just 25% of the available storefronts and restaurant space in the mall.

Hospital Bed Occupancy Rates

Hospital bed occupancy rates, as well as occupancy rates for nursing homes, can be useful for examining trends in the facility's growth. To avoid overcrowding, these facilities manage their occupancy rates. They often track occupancy rates for specific departments as well, to help assess growth and demand. Governments and organizations also use aggregate numbers on hospital occupancy levels to make plans regarding public health initiates.


Additional Resources

  1. Supply & Demand In The Lodging Industry [business.pages.tcnj.edu]
  2. Lodging Industry Trends 2015 [gvsu.edu]
  3. 2017 Central Texas Economic Forecast [baylor.edu]
  4. Gaming & Hospitality [cber.unlv.edu]
  5. Chapter 2 Basic Real Estate Economics [isites.harvard.edu]
  6. Natural Occupancy Rates And Development Gaps [scholarship.sha.cornell.edu]