Luxury Hotel Break-Even Analysis: $628K Monthly Revenue Target

Fixed costs $378.8K/mo Month 1 base

Contribution margin 94.5% After variable costs

Break-even revenue $400.9K/mo Monthly target

Break-even timing Month 1 Launch month

Break-even calculator

See whether monthly room revenue, direct costs, and fixed overhead cover the hotel's break-even point.

Lean Base Full

Monthly revenue Revenue is the cash coming in each month before direct costs. $ Lower sales Higher sales Variable expenses These rise with guest volume, food and beverage, and service use. $ Lower costs Higher costs

Money available to cover fixed costs $2,535,775 $2,672,234 revenue - $136,459 variable expenses

Margin ratio

95%

Covers fixed costs

Yes

Fixed monthly costs This is the monthly cost base your contribution margin must cover. $ Lower base Higher base

Break-even chart Revenue Total costs

Which hotel expenses are fixed, variable, semi-variable, or semi-fixed at break-even?

Cost classification

Break-even works only if fixed costs stay fixed and occupancy-linked costs move with rooms sold. Here, the big risk is treating the $250,000 monthly lease like a room cost or treating staffing that steps up with volume as fully variable.

Expense	Cost	Break-Even Treatment	Common Mistake
Property Lease	Fixed	Use $250,000 per month as fixed overhead in Month 1 through Month 60.	Spreading lease across occupied rooms and understating break-even risk at low occupancy.
Base Utilities	Semi-variable	Start with the $30,000 monthly base load, then model occupied-room usage separately.	Treating all utilities as fixed even when laundry, heating, cooling, and water rise with occupancy.
Property Insurance	Fixed	Use $15,000 per month as fixed overhead for the relevant planning range.	Linking insurance to room nights sold when the model shows a stable monthly amount.
General Maintenance	Semi-variable	Use the $40,000 monthly base, then add wear-and-tear assumptions as occupancy rises.	Assuming maintenance is fully fixed while higher occupied room nights drive more repairs.
General Manager	Fixed	Use the $250,000 annual salary at 1.0 full-time equivalent as fixed management payroll.	Scaling the general manager expense with occupancy instead of keeping the role staffed year-round.
Front Desk Staff	Semi-fixed	Model salary in steps as full-time equivalents rise from 4.0 in the first year to 6.0 by the fifth year.	Treating front desk labor as perfectly variable when staffing changes in shifts, not single rooms.
Food & Beverage COGS	Variable	Apply the model rate to Food & Beverage Sales; first-year rate is 12.0%.	Putting food and beverage inputs into fixed overhead instead of tying them to sales volume.
Luxury Travel Advisor Commissions	Variable	Apply the commission rate to qualifying booking revenue; first-year rate is 4.0%.	Ignoring channel mix and treating commissions as fixed monthly spend.

How does break-even change from lean to base to full demand at this hotel?

Scenario table

As occupancy rises from 55% to 82% and ancillary revenue climbs from $300K to $515K, the fixed cost base gets spread over more sales. So lean is the tightest downside test, while full demand gives the widest cushion.

Planning assumptions only; actual break-even will move with room mix, ancillary sales, and staffing.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean opening case	$2.48M	$483K	$506K	80.5%	$1.49M	Above break-even, but the cushion is tightest here.
Base operating plan	$3.41M	$606K	$520K	82.2%	$2.28M	Best planning case; break-even risk stays low at this mix.
Full-demand case	$3.80M	$616K	$534K	83.8%	$2.65M	Wide cushion, but staffing pressure rises with volume.

What breaks this hotel's break-even plan first?

Stress test

Year 1 clears break-even by a wide margin, but the buffer is sensitive to room mix, travel commissions, and fixed overhead. A 20% revenue drop still leaves cushion, yet lease, payroll, or utility creep can tighten it fast.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change in Year 1 occupancy, ADR, or fixed overhead.	$628K/month	$1.11M cushion	Base mix covers fixed load comfortably.
Revenue shortfall	Year 1 revenue falls 20%.	$628K/month	$760K cushion	The plan still clears break-even, but the buffer shrinks hard.
Fixed costs up	Fixed monthly costs rise 10% to about $556K.	$691K/month	$1.04M cushion	Lease, payroll, or utilities creep lifts the hurdle.
Margin pressure	Variable expenses rise from 19.5% to 24.5%.	$670K/month	$1.07M cushion	Higher commissions or weak mix cut contribution margin.
Combined pressure	Fixed costs rise 10% and variable expenses hit 24.5%.	$737K/month	$998K cushion	Two small drags together can erase the buffer.

What should a luxury hotel founder verify before signing the lease and starting buildout?

Founder checklist

Before you sign the lease or start buildout, make sure the property can support the model at about $628K a month in revenue, not just full occupancy. The current plan only works if the 135-room mix, staffing ramp, and cash buffer hold through the Month 5 cash trough of -$3.722M.

1Demand Ramp$628K/mo

Verify opening occupancy can move from 55.0% in Year 1 toward 82.0% by Year 5 while supporting about $628K a month, or the lease will outrun demand.

2Fixed Load$378K/mo

Confirm the lease holds at $250K a month and the rest of the fixed stack stays near $128K a month, because that $378K base hits every month.

3Contribution Margin12.0% + 4.0%

Hold food and beverage COGS at 12.0%, spa product COGS at 2.0%, advisor commissions at 4.0%, and amenity supplies at 1.5%, because these costs decide what is left for overhead.

4Capacity Mix135 keys

Match the room mix to the model: 80 Deluxe Rooms, 40 Executive Suites, 10 Presidential Suites, and 5 Penthouses, for 135 keys total.

5Payroll Ramp$1.53M/yr

Lock the Year 1 payroll plan at $1.53M and add front desk and F&B labor only as occupancy rises, so service quality does not get ahead of demand.

6Cash Buffer-$3.722M

Keep a separate cash reserve, because the model bottoms at -$3.722M in Month 5 and working capital must still cover taxes, debt service, and reserves.