The presence of a "No Vacancy" sign is a means of indicating to people in the immediate area that the building or edifice bearing the sign has reached its capacity and does not have any additional room for people or any type of storage needs. Most commonly, a No Vacancy sign is seen on the exterior of motels and hotels. However, other establishments sometimes make use of this type of sign, including storage facilities and boarding houses.

The main purpose of a sign bearing the message of “No Vacancy” is to prevent people from entering the premises and inquiring about the availability of space for rent or lease. From this perspective, the sign helps to minimize the time spent by people who need space for some reason as well as employees who have other tasks to manage other than informing visitors that no vacancy is available at the present time.

In times past, a motel No Vacancy sign was most often displayed near the office of the motel, allowing anyone whom stopped to rent a room to quickly determine there were no rooms available. Over time, the simple placard near the office door was replaced with larger neon signs that could easily be seen from the roadway. When rooms were unoccupied and available for renting, the No Vacancy sign was shut off. However, if all the available rooms were taken, the sign was turned on to alert motorists that there was no reason to stop and look for lodgings.

Even higher end hotel chains sometimes make use of signs displaying the message of No Vacancy. Hotel No Vacancy signs are normally more discreet, sometimes placed near the entrance to the hotel or at the reception desk. However, there are older hotels that sometimes have a modest electronic sign placed at street level. These signs are often more subdued than the neon versions used by hotels and is often at eye level or slightly higher, making it easy for pedestrians to identify which hotels have rooms available and which do not.

Boarding houses are another venue in which a No Vacancy sign is commonly employed. Establishments of this type normally have a simple removable sign that can be placed by the main door or in a window facing the street. When rooms are available for lease, the proprietor simply removes the sign from public view, returning it to the window or position by the door only when all the rooms in the boarding house are claimed.