Hotel Break-Even Analysis: $126K Monthly Revenue Target

Fixed costs $104K/mo Base burn

Contribution margin 91% After variable

Break-even revenue $115K/mo Monthly target

Break-even timing Month 1 At launch

Break-even calculator

Test monthly room and ancillary revenue against direct costs and the fixed cost base.

Lean Base Full

Monthly revenue Revenue is the cash flow that covers direct costs and then helps pay the fixed base. $ Lower revenue Higher revenue Variable expenses These are direct costs that rise with occupancy and guest spend, like commissions, housekeeping supplies, food and beverage COGS, and spa product COGS. $ Lower direct cost Higher direct cost

Money available to cover fixed costs $503,000 $593,000 revenue - $90,000 variable expenses

Margin ratio

85%

Covers fixed costs

Yes

Fixed monthly costs This is the monthly cost base that room revenue must cover before profit starts. $ Lower fixed cost Higher fixed cost

Break-even chart Revenue Total costs

Which hotel expenses stay fixed, and which move with occupancy and sales?

Cost classification

Break-even is reliable only when fixed, variable, and staffing-step expenses are split cleanly. If labor or utilities are treated as fully variable, Month 1 break-even can look safer than the cash reality.

Expense	Cost	Break-Even Treatment	Common Mistake
Property Insurance	Fixed	Include $5,000 per month in the fixed overhead base, regardless of occupied rooms.	Flexing insurance with occupancy instead of keeping it steady.
Property Taxes	Fixed	Include $8,000 per month before calculating room-night break-even.	Leaving taxes out because they do not feel operational.
Utilities Base	Semi-variable	Model the $10,000 base as required overhead, then add usage only when occupancy drives higher consumption.	Treating the full utility bill as fixed at high occupancy.
Property Management System License	Fixed	Include $2,500 per month as a recurring operating platform charge.	Spreading it per booking and understating low-occupancy losses.
OTA Commissions	Variable	Apply the first-year 8.0% rate to booking revenue that flows through commission channels.	Applying commissions to all revenue, including direct bookings.
Food & Beverage COGS	Variable	Apply the first-year 7.0% rate to food and beverage sales, not room revenue.	Using one blended margin for rooms and restaurant sales.
Front Desk Staff	Semi-fixed	Keep minimum coverage in place, then step staffing from 3.0 FTE in the first year to 4.0 FTE by the third year.	Treating all front desk payroll as variable when coverage is needed even at low occupancy.
Housekeeping Staff	Semi-fixed	Model staffing in steps as occupied rooms rise, from 5.0 FTE in the first year to 8.0 FTE by the fourth year.	Linking every housekeeping dollar directly to occupied rooms.

How does hotel break-even change from a lean opening case to a base case and a full-ramp case?

Scenario table

As occupancy rises from 55% to 82% and ADR climbs, revenue grows faster than fixed overhead. The break-even cushion widens because payroll and property costs stay mostly fixed, so demand and staffing mix matter more than optimism.

Planning assumptions only; actual break-even moves with seasonality, rate mix, and cost control.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean opening case	$473k	$82.8k	$104.0k	82.5%	$286.2k	Clear cushion if occupancy holds.
Base case	$694k	$105.5k	$121.9k	84.8%	$466.6k	Healthy coverage; break-even risk is low.
Full-ramp case	$807k	$113.0k	$124.8k	86.0%	$569.2k	Strong cushion; demand swings matter less.

What breaks the hotel break-even plan first?

Stress test

The base plan has a strong Year 1 cushion, but slower ramp and higher room-level costs eat into it fast. A 10% revenue miss, a 10% fixed-cost lift, or higher variable expense pressure all reduce the buffer; the plan still works, but with less room for error.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$187,000	$286,000 cushion	Strong launch cushion, but costs still matter.
Revenue shortfall	Revenue is 10% below the base plan.	$179,000	$247,000 cushion	Slower ramp cuts room for error.
Fixed-cost increase	Fixed overhead rises 10% to $114,400.	$197,000	$276,000 cushion	Payroll, utilities, and insurance pressure the buffer.
Margin pressure	Variable expense rate rises to 205%.	$202,000	$271,000 cushion	Higher OTA mix and service costs erode margin.
Combined pressure	Revenue is 10% lower, fixed overhead rises 10%, and variable expense rate rises to 205%.	$202,000	$224,000 cushion	Still viable, but the cushion thins fast.

Can this hotel clear break-even before you commit to the property?

Founder checklist

If local demand can support 55.0% Year 1 occupancy across the 120-room mix, the model says break-even starts in Month 1. The real test is whether rates, staffing, and the $709,000 cash floor all hold before you sign the lease or buy the property.

1Demand test55.0% Y1

Compare that target to local room supply and seasonality, because a hotel only breaks even if occupancy holds when travel patterns soften.

2Fixed load$104.0K/mo

Add the $36.5K fixed property costs to the $67.5K Year 1 wage load, and check that your revenue plan clears about $104.0K a month before room variable costs.

3Room margin90.5% CM

Rooms keep about 90.5% after 8.0% OTA commissions and 1.5% housekeeping supplies, so confirm weekday and weekend ADR can still cover the fixed load.

4Staffing plan18 FTE

Lock the Year 1 coverage plan before hiring, because the listed staff totals 18.0 FTE and labor has to match the occupancy ramp from opening.

5Cash buffer$709K

Hold at least the $709,000 minimum cash balance, with the low point in Month 2, so capex timing and slower ramp do not trap the hotel in a cash squeeze.

6Launch spend$1.22M capex

Tie the full room, kitchen, spa, IT, laundry, AV, security, and landscaping spend to a launch plan with pre-opening marketing, because that money only works if bookings arrive fast enough.