Hotel Acquisition Break-Even: $145K Monthly Revenue in Year 1

Fixed costs $39.5K/mo Core overhead

Contribution margin 67% After variable costs

Break-even revenue $59.0K/mo Revenue needed

Break-even timing Month 33 Model turns positive

Break-even calculator

Use this to test monthly revenue, variable expenses, and fixed monthly costs for a hotel acquisition business.

Lean Base Full

Monthly revenue Revenue is the cash pool that pays operating costs. $ Lower sales Higher sales Variable expenses These are the property operating costs and marketing fees that rise with revenue. $ Lower costs Higher costs

Money available to cover fixed costs $4,004,000 $5,600,000 revenue - $1,596,000 variable expenses

Margin ratio

72%

Covers fixed costs

Yes

Fixed monthly costs This is the monthly overhead contribution margin must cover. $ Lower overhead Higher overhead

Break-even chart Revenue Total costs

Which hotel acquisition expenses are fixed and which move with sales?

Cost classification

Break-even is only reliable if stable overhead stays fixed and revenue-linked items move with sales. Here, monthly overhead, staffing steps, and property-level percentages drive the Month 33 break-even math.

Expense	Cost	Break-Even Treatment	Common Mistake
Office Rent	Fixed	Include $15,000 per month in fixed overhead.	Tying rent to occupancy instead of the corporate office lease.
Professional Services	Fixed	Include $10,000 per month for legal and accounting overhead.	Burying recurring legal and accounting work in deal costs.
Market Intelligence Subscriptions	Fixed	Include $5,000 per month as recurring overhead.	Ignoring recurring research tools after acquisition close.
Corporate Insurance	Fixed	Include $2,500 per month in corporate fixed overhead.	Confusing corporate coverage with property insurance.
IT & Software Licenses	Fixed	Include $4,000 per month in operating break-even.	Treating ongoing software licenses as one-time technology spend.
Corporate Wages	Semi-fixed	Add by staffing year: $690,000 in Year 1, $850,000 in Year 2, and $940,000 in Year 3.	Assuming payroll flexes with rooms sold.
Property Operating Costs	Variable	Apply as a revenue percentage: 25.0% in Year 1, 23.0% in Year 2, and 21.0% in Year 3.	Modeling property operations as fixed monthly overhead.
Franchise Fees & Marketing	Variable	Apply as a revenue percentage: 8.0% in Year 1, 7.8% in Year 2, and 7.5% in Year 3.	Leaving brand and marketing fees out of contribution margin.

How does hotel break-even change from a lean first year to a base case and then a full stabilization case?

Scenario table

Break-even moves up as fixed costs rise and margin improves. Here’s the quick math: higher contribution margin helps, but the hotel still has to cover a bigger monthly overhead stack before profit shows up.

Planning figures only; occupancy, ADR (average daily rate), ancillary revenue, and labor efficiency can shift the break-even point.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean case: Year 1 break-even	$1.448M	$478k	$970k	67.0%	$0	Covers fixed costs, but there is no cushion.
Base case: Year 2 break-even	$1.594M	$491k	$1.103M	69.2%	$0	Margin improves, yet revenue still has to hit the full target.
Full case: Year 3 break-even	$1.648M	$470k	$1.178M	71.5%	$0	Best margin here, but the larger fixed base keeps pressure on volume.

What breaks hotel break-even first?

Stress test

The base case needs about $1,448k of monthly revenue to cover roughly $970k of fixed cost at a 67% contribution margin. Average daily rate (ADR) compression, weak occupancy, payroll creep, and repair overruns are the first warning signs.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$1,448k	$0 gap	No cushion means any miss turns into loss.
Revenue shortfall	Revenue falls by $100k.	$1,597k	$149k gap	A modest occupancy or ADR dip widens losses fast.
Fixed-cost pressure	Fixed costs rise by $100k.	$1,597k	$149k gap	Payroll or repairs can erase the cushion fast.
Margin pressure	Variable expenses rise by 1 percentage point.	$1,470k	$22k gap	A small cost drift pushes break-even higher.
Combined pressure	Revenue falls by $100k and fixed costs rise by $100k.	$1,746k	$298k gap	Lower revenue plus higher costs is the fastest warning.

Is this hotel acquisition break-even ready before you close and fund the build?

Founder checklist

Before you close, make sure the hotel can support about $1.448M in monthly Year 1 operating revenue, hold variable costs near 33.0%, and carry the added overhead and build spend. If those checks miss, the Month 33 break-even target is not credible yet.

1Opening Demand$1.448M/mo

Verify occupied room nights, ADR, and ancillary revenue can reach this Year 1 run rate before you commit to the acquisition.

2Variable Margin67.0% CM

Use seller records to confirm 25.0% property operating costs plus 8.0% franchise fees and marketing, because that leaves a 67.0% contribution margin before fixed overhead.

3Fixed Overhead$97.0K/mo

Keep office, legal, market data, insurance, travel, software, and core salaries near this Year 1 run rate, or break-even slips.

4Staffing Ramp$110.3K/mo

Before adding the Year 2 deal sourcer and administrative assistant, confirm the extra headcount still fits the pipeline and keeps overhead on track.

5Build Scope$19.5M

Inspect property condition and renovation needs against the full 12-month construction budget, because scope creep can soak up the cash needed to stabilize.

6Cash CushionMonth 32

Protect cash through the Month 32 low point of about -$87.9M and skip discretionary upgrades until Month 33 break-even is actually in reach.