ALTAREV | REVENUE INSIGHTS

Insights for Boutique & Lifestyle Hotels in Portugal | Issue #27 | February 2026

The Full Hotel Fallacy: Why 95% Occupancy Is Costing You Money

The most expensive myth in boutique hospitality — and the data that destroys it.

The Conversation That Reveals Everything

I hear this line at least twice a month:

"We had an incredible month — 94% occupancy!"

My response is always the same:

"Great. What was your RevPAR?"

Silence.

Because this is the most expensive myth in boutique hospitality:

Full hotels are not the most profitable hotels.
In fact, they’re often the least profitable.

This newsletter will show you exactly why — with real numbers, real examples, and Portugal-specific data your competitors don’t have.

The Occupancy Trap

High occupancy feels like success.
It’s visible. It’s easy to celebrate.
It keeps everyone busy.

But here’s the truth:

When you push occupancy above 90%, you’re usually paying for it.

A real example from a 32-room Alfama boutique:

Scenario A — “Full House” (95%)
ADR: €165
RevPAR: €156.75

Scenario B — “Revenue Quality” (82%)
ADR: €215
RevPAR: €176.30

Scenario B earns 12.5% more revenue
— with 13 fewer rooms cleaned per night.

Fewer rooms.
Higher revenue.
Lower cost.

That’s revenue management.

The Hidden Costs of “Full” Nobody Tracks

1. Housekeeping Load (Your Silent Profit Killer)

€18–€28 per occupied room in PT boutiques.

At 95% occupancy, you’re spending the most…
on the cheapest rooms you sold.

2. Operational Friction

• Breakfast bottlenecks

• Check-in congestion

• Maintenance delays

• Review scores drop

• Team burnout increases turnover

A Porto lifestyle hotel saw review scores drop 11% during 90%+ occupancy weeks.

That impacts ADR for months.

3. Rate Integrity Erosion

Discounting the last 10% of rooms teaches the market:

• Wait

• Watch

• Hold out for lower rates

You’re not just hurting today’s rate.
You’re training your future guest.

What Optimal Occupancy Really Looks Like

Based on 18 boutique hotels across Lisbon, Porto, Algarve:

Urban Boutique (Lisbon/Porto):

Optimal: 78–85%

Lifestyle / Design Hotels:

Optimal: 72–82%

Coastal / Resort:

Optimal: 70–80% (shoulder)
85–92% (peak)

Across all cases:
Hotels optimizing for rate quality (not occupancy %)
outperform high-occupancy hotels by 8–15% GOPPAR.

This pattern is universal.

Case Example: Two Hotels, Same Street, Different Strategy

(Chiado, Lisbon — 200m apart)

Hotel A — Volume Strategy

Occ: 91.3%
ADR: €178
RevPAR: €162.51
TRevPAR: €198
Reviews: 8.4 → dropping
Staff turnover: 34%

Hotel B — Revenue Quality Strategy

Occ: 79.8%
ADR: €237
RevPAR: €189.13
TRevPAR: €251
Reviews: 9.1 → rising
Staff turnover: 18%

Hotel B makes:

• +16.4% more room revenue

• +26.8% more total revenue

• With fewer rooms sold

Same market.
Same demand.
Different philosophy.

Hotel B isn’t chasing occupancy.
It’s controlling revenue.

Why This Myth Is Especially Dangerous in Portugal

1. OTA dependency amplifies discount pressure

Most PT boutiques sit around 60–72% OTA share.
Discount once → OTAs push you even lower.

2. Seasonality creates panic discounting

Hotels that defend shoulder-season rates enter peak season with 9–14% stronger ADR.

3. New supply is growing

2026 sees 8–12 lifestyle hotels opening.
Occupancy-chasers will race to the bottom.
Rate-dominant hotels will dominate the premium tier.

The Framework: Stop Celebrating Occupancy. Start Measuring Revenue Quality.

Elite boutique hotels focus on:

1. Profit Per Occupied Room

Your actual margin by occupancy band.

2. Rate Capture Efficiency

ADR ÷ optimal ADR.

3. Revenue Per Guest

Hotels with strong rate integrity attract higher-value guests.

4. Guest Quality Score

LOV segments spend more, stay longer, repeat more.

5. Minimum Acceptable Rates (MAR)

The system that protects your ADR for the next 12 months.

How to Know If You're In the Occupancy Trap

Ask yourself:

1. Are your fullest months your most profitable?

2. Do you discount to fill the last 15% of rooms?

3. Does guest satisfaction drop during high occupancy?

4. Are you competing primarily on price?

5. Is your revenue strategy built around occupancy percentages?

If you said “yes” to even two — you’re in the trap.

The Uncomfortable Truth

Empty rooms at the right rate are more profitable
than full rooms at the wrong rate.

Because what you're optimizing isn’t occupancy —
it’s:

• rate power

• guest quality

• margin

• operational efficiency

• long-term positioning

• brand strength

Full feels good.
Profit lasts.

Next Steps

If you want me to analyze your actual optimal occupancy zone — based on your booking behavior, competitive set, and operational cost structure — reply “ANALYZE.”

I’ll send you a tailored assessment within 48 hours.

No pressure.
Just clarity.

Jake Gruijters
Revenue Management Consultant, AltaRev

Next Month:
Dynamic Pricing for Shoulder Season —
how to defend rate integrity without losing occupancy entirely.