Fashionable Hotel Break-Even Analysis: $138K Monthly Revenue

Fixed costs $82.5K/mo Base overhead

Contribution margin 83% After variable costs

Break-even revenue $99.4K/mo Needed monthly sales

Break-even timing Month 1 Launch month

Break-even calculator

Test monthly room revenue, variable expenses, and fixed costs against break-even for a stylish hotel.

Lean Base Full

Monthly revenue Higher room sales give more margin to cover fixed overhead. $ Lean month Peak month Variable expenses These are costs that rise with rooms sold and guest spend. $ Tighter costs Higher costs

Money available to cover fixed costs $812,636 $957,169 revenue - $144,533 variable expenses

Margin ratio

85%

Covers fixed costs

Yes

Fixed monthly costs This is the monthly cost base that margin has to cover. $ Light overhead Heavier overhead

Break-even chart Revenue Total costs

Which hotel expenses stay fixed, and which move with occupied rooms?

Cost classification

Break-even is reliable only if fixed overhead is kept separate from room-volume-driven spend. Here, Month 1 break-even depends on recurring base costs, while sales-linked items flex with occupancy and guest demand.

Expense	Cost	Break-Even Treatment	Common Mistake
Property Lease Payment	Fixed	Include the $40,000 monthly lease in fixed overhead from Month 1 through Month 60.	Spreading lease by occupied room and understating the cash needed at low occupancy.
Property Taxes	Fixed	Include the $10,000 monthly charge in fixed overhead for each operating month.	Treating property taxes as if they rise only when room nights rise.
Insurance Premiums	Fixed	Include the $5,000 monthly premium in fixed overhead before contribution margin.	Leaving insurance below the break-even line because it does not feel operating-driven.
Utilities Base	Semi-variable	Start with the $12,000 monthly base, then model added usage as occupied rooms increase.	Putting all utilities in fixed overhead and missing higher usage at stronger occupancy.
Food & Beverage Ingredients	Variable	Apply the first-year 9.0% rate to sales tied to restaurant and bar activity.	Using a flat dollar amount even when guest spend changes with occupancy.
Guest Amenity Supplies	Variable	Apply the first-year 1.5% rate as guest volume and room revenue grow.	Budgeting amenities as fixed and hiding the cost of each occupied room.
Booking Commissions	Variable	Apply the first-year 2.5% rate to booking-driven revenue in contribution margin.	Ignoring commissions in break-even and overstating margin from sold rooms.
Guest Services Lead	Semi-fixed	Model salary in staffing steps, with FTE rising from 1.0 in the first year to 2.0 by Year 5.	Treating all payroll as variable when core management payroll stays live at low occupancy.

How does break-even change across lean, base, and full-demand cases for this hotel?

Scenario table

Break-even gets easier as occupancy, ADR, and room mix improve, because contribution margin (CM), the revenue left after variable costs, rises while fixed payroll and lease costs stay mostly flat. The full-demand case has the strongest cushion.

Planning assumptions only; actual results will move with rate, occupancy, and cost control.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean opening month	$722k	$123k	$115k	83.0%	$484k	Still well above break-even, but the cushion depends on 62% occupancy.
Base growth year	$1.07M	$162k	$124k	84.9%	$785k	Break-even is covered with room to spare as ADR and occupancy both rise.
Full-demand year	$1.36M	$184k	$127k	86.5%	$1.05M	Best cushion in the table; higher rates and 83% occupancy absorb overhead.

What breaks first if occupancy, ADR, or staffing slip?

Stress test

The plan is most exposed to softer occupancy, lower ADR, and any rise in fixed overhead. With about $725K monthly revenue against a $1,381K break-even line, even small slippage can widen the gap fast.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$1,381K	$656K gap	The base plan still needs more monthly revenue to cover fixed load.
Revenue shortfall	Monthly revenue drops 10% to about $653K on weaker occupancy and ADR.	$1,381K	$728K gap	Lower room demand pushes the plan farther from break-even.
Fixed-cost pressure	Monthly overhead rises by $10K.	$1,526K	$801K gap	One staffing or utility bump adds about $145K to break-even.
Margin pressure	Contribution margin falls 1 point to 82%.	$1,398K	$672K gap	Booking fees or food cost creep cuts the cushion fast.
Combined pressure	Monthly revenue drops 10%, overhead rises $10K, and margin falls 1 point.	$1,544K	$891K gap	Weak demand and cost creep can erase the cushion.

What should you verify before signing the lease and buildout for this hotel?

Founder checklist

Before you sign the lease or spend on buildout, test the hotel against the Month 2 cash low and the Year 1 cost base. If the property, staffing, and opening stack cannot support the model’s $82.5K monthly fixed load and $471K reserve need, break-even gets fragile fast.

1Fixed load$82.5K/mo

Confirm the site can carry the $40K lease plus $10K property tax and still leave room for direct operating costs, because that fixed load starts on day one.

2Reserve cash$471K

Keep at least $471K of cash ready for the Month 2 low point, or a slow opening can force cuts before occupancy and outlet sales stabilize.

3Buildout plan$1.455M

Lock the full $1.455M buildout plan for interior fit-out, IT, kitchen and bar equipment, spa setup, furniture, security, signage, HVAC, and laundry so you do not stall mid-open.

4Payroll ramp$385K/yr

Hold Year 1 payroll to $385K and keep the Spa Manager out until Month 13 unless spa revenue is already real, because labor ramps faster than sales in most hotel openings.

5Margin test6.5%

Check that room, bar, event, and restaurant pricing can absorb the 2.5% booking commission and 4.0% marketing drag, so contribution margin survives the first year.

6Opening stack62%

Verify reservation software, linens, amenities, food and beverage suppliers, housekeeping, security, maintenance, and opening marketing are ready by Month 1, and that the 62% Year 1 occupancy target is backed by real bookings.