Occupancy Rate is the share of a property's sellable inventory that actually sold. It answers how full you ran, and nothing else.
Occupancy = Rooms sold / Available room-nights
Available room-nights = Sellable rooms x Nights in period
The denominator is where most mistakes happen. It counts every room for every night in the period, whether or not anyone slept in it, so a 120-room property across a 30-night month has 3,600 available room-nights, not 120.
Two adjustments keep the number honest. Rooms genuinely out of service for maintenance usually come out of the denominator, and complimentary or house-use rooms come out of the numerator. Do it the same way every month, or a month-over-month comparison measures your bookkeeping instead of your business.
That 120-room property selling 2,880 room-nights ran 80% occupancy.
Because occupancy has no price in it, you can always buy more of it by charging less. A property that holds rate at 70% occupancy and $180.00 ADR earns $126.00 RevPAR. One that discounts to fill at 90% and $130.00 earns $117.00. The fuller month made less per available room.
For short-term rentals the formula is identical with unit-nights in place of room-nights. The difference is what counts as available: owner stays, seasonal closures, and a listing that was only live for eleven days of the month all change the denominator.
Work it out with the occupancy calculator.