Occupancy rate is room nights sold divided by room nights available, times 100. Out-of-order rooms are usually removed from the available count, so the figure reflects the inventory you could actually sell.
Example: a 40-room hotel over 30 days has 1,200 available room nights. Selling 900 of them means 75% occupancy. It is the most intuitive measure of how full the house is, but it says nothing about price: running at 95% on rates that are too low is not a good month.
In practice: the goal is not maximum occupancy at any cost but the balance of occupancy and ADR that maximises RevPAR. Watch it night by night, too: a 75% monthly average can hide sold-out weekends and empty midweek nights that need very different strategies.
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