Occupancy rate in vacation rentals: definition, calculation and 10 tips to improve it

When you want to calculate the profitability of your vacation rental business or improve its performance, occupancy rate is a key data to look at. But what exactly is occupancy rate, how can you calculate to improve it? Answers are here in the following article!

What is the occupancy rate in vacation rentals?

The occupancy rate in vacation rentals is the percentage of days a short-term rental is rented out compared to the total available rental period. This key performance indicator is used by vacation rental owners to measure the popularity and performance of a property as a vacation rental.

Depending on your type of vacation rental, you can calculate the occupancy rate for the main unit or for sub-units in the case of B&Bs or sub-divisional apartments for example.

How to calculate the occupancy rate in a seasonal rental?

Find below the occupancy rate formula for your vacation rental :

Occupancy rate calculation: (number of nights booked / number of nights available) x 100

Let’s take a concrete example: You have a vacation rental that is rented out on online booking platforms for 365 days a year. You have rented your vacation rental 287 nights out of 365. According to the formula of the occupancy rate seen below we obtain the following calculation: (287/365)x100. Your average occupancy rate is therefore 78.6%.

Keeping an eye on your occupancy rate

Occupancy rate is one of the essential metrics to monitor. Indeed, this KPI can give you an idea of the performance of your vacation rental business in relation to the set objectives. By collecting your data you will be able to calculate your average occupancy rate (or per month, per season, per year). This will allow you to see its evolution and to make informed decisions if your occupancy rate is decreasing or increasing.

Occupancy rate must be put in perspective with other key performance indicators such as your net revenues. Indeed, you could increase your occupancy rate in different ways (such as lowering your rates per night). However, this also impacts your net revenues. You will therefore have to define your expected objectives and make your calculations to obtain the rental income that you have targeted for your rental property.

10 tips to increase your occupancy rate

Find a non-exhaustive list of 10 strategic tips to increase the occupancy rate of your seasonal rental.

1. Conduct a market analysis and an analysis of the competitors

If the number of nights booked does not correspond to your expectations, there are several reasons for this. One of them may be related to your competitors operating in the same market as yours.

Conducting a market analysis and consulting similar properties (similar facilities, competitors’ rates) can help you set a fair price to offer the best services at the best price to your potential customers. You can also complete your offer with missing equipment.

2. Open your booking calendar in advance

There are also travelers who book from one year to the next. To meet this demand, and not only, it is necessary to open your reservation availability well in advance (1 year minimum) and thus benefit from early reservations. The more days available in your occupancy calendar, the better your ranking will be.

3. Open your rental to several target groups

Depending on your project and the vision you want to give to your rental, you can offer it to different target groups: couples, seniors, families, disabled people, business travelers, workation. Addressing a variety of target markets allows you to reach more potential travelers and therefore generate more booked nights.

Find all these profiles and how to attract them in our Smoobu guides.

4. Have your property managed by a professional service

The management of your vacation rental project can be very time-consuming (which you may not have). Indeed, many owners work on it as a secondary activity and therefore have less time to devote to it.

To develop your business, your rental income and the reputation of your property, you can also delegate the management of your property to a professional service such as a rental agency or a concierge.

5. Use a dynamic pricing tool

Your occupancy rate may be declining, stagnant or not matching your expected occupancy rate because your prices are too high, too low or simply not in line with market prices. By leveraging the services of a dynamic pricing solution like Pricelabs, Beyond or Wheelhouse, you can offer your future travelers prices that match the market.

These solutions allow you to set a minimum rate so that you don’t rent at a loss, and then use powerful algorithms to take into account popular events that attract travelers as well as the market’s supply and demand at a given moment to calculate a fair price.

6. Offer last minute deals

The occupancy rate varies according to the rental period (high or low season for example). So to boost it, you can propose on your own website or on the booking platforms last minute promotions. This way you can attract spontaneous tenants and trigger a booking.

Find in our guide everything you need to know about Airbnb promotions.

7. Initiate a communication and marketing strategy

To develop your bookings and boost your occupancy rate, you can launch a communication and marketing strategy in addition to your efforts on the booking platforms. To do so, you can rely on several methods:

• Develop your brand image
• Promote your vacation rental on social networks
• Launch your own direct booking website and promote it via Google My Business for example

Find out more about the best marketing strategies to implement in our Smoobu guides.

8. Aim for positive reviews to stand out from the crowd

Offering optimal services to your guests is an absolute necessity in order to satisfy them and provide an unparalleled travel experience. By capitalizing on a quality vacation rental and a warm welcome and sense of contact, you will put all the chances on your side to collect positive reviews on your listings.

The better your ratings are, the higher the algorithms of the booking sites will make you appear in the search results. By gaining visibility, you will have more chances to see clicks on your listings and see your bookings increase.

9. Monitor your statistics / KPis / occupancy rate

With your vacation rental, you may want to look at different statistics (occupancy rate, average revenue, number of nights, cancellation rate, etc.) in order to learn from them and make better decisions to optimize your rental management. Your data has a story to tell, don’t neglect it!

Discover the Smoobu smart dashboard.

10. Use a vacation rental management solution

Another way to increase your occupancy rate and your seasonal rental business in general is to use a short-term rental management solution. This type of solution generally offers a channel manager that allows you to automatically synchronize your reservation calendars in real time on your different booking sites. This way you can develop your online presence on several booking platforms, multiply your contact points and potentially your bookings.

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