Because occupancy reflects both supply and demand it measures the economic health of the individual hotel and, indeed, of the entire industry.

a. true
b. false

True

Explanation:

Within the hospitality industry such as hotels, the are Key Performance Indicators that used to measure financial health. These Key Performance Indicators include:

Average room rate, bed occupancy rate, occupancy percentage and cost per occupied room.

It is quite clear that occupancy is actually key because it is reflected in three out of the four Key Performance Indicators for the hospitality industry.

Occupancy and Economic Health

Average room rate, bed occupancy rate and occupancy percentage actually determines the revenue that comes into the hotel at any point in time. And low performance indicators may mean difficulty in meeting financial obligations.

Occupancy and Industry Health

Another reason why occupancy is key especially in the entire industry is because occupancy is the key service provided by hotels and as such, a low occupancy rate on the average from various hotels may indicate danger in the entire industry and vice versa.

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