Hotel Break-Even Analysis: Cover Costs at About $189K/Month

Fixed costs $44.5K/mo Base monthly burn

Contribution margin 90% After variable costs

Break-even revenue $152K/mo Monthly target

Break-even timing Month 1 Launch point

Break-even calculator

Test monthly room, dining, spa, and event revenue against the hotel's variable and fixed cost base.

Lean Base Full

Monthly revenue Use total monthly sales from rooms and other guest spend. $ Slow month Peak month Variable expenses Use costs that move with guest volume, like commissions, supplies, food, and spa product use. $ Light fees Heavy fees

Money available to cover fixed costs $938,000 $944,000 revenue - $6,000 variable expenses

Margin ratio

99%

Covers fixed costs

Yes

Fixed monthly costs Use the monthly cost base the hotel must cover, like staffing and overhead. $ Tight base Big base

Break-even chart Revenue Total costs

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

Cost classification

Break-even is only useful if each expense follows the right occupancy behavior. Treating payroll as fully variable or utilities as fully fixed can make Month 1 break-even look safer than it is.

Expense	Cost	Break-Even Treatment	Common Mistake
Property Insurance	Fixed	Use $12,000 per month regardless of room nights sold.	Linking it to occupancy instead of the policy period.
Utilities Base	Semi-variable	Start with the $15,000 monthly base, then add usage as occupancy rises.	Treating all utilities as fixed when laundry, cooling, and water rise with guests.
PMS Software License	Fixed	Use $5,000 per month as a stable operating platform charge.	Spreading it per booking and overstating savings in low-occupancy months.
General Manager, Head Chef, Spa Manager, and Sales & Marketing Manager	Semi-fixed	Keep core leadership in place, then reassess only when operating scale changes.	Modeling management payroll as if it flexes daily with occupancy.
Housekeeping Staff and F&B Service Staff	Semi-fixed	Add staff in steps as occupancy and service volume grow across the forecast.	Treating all labor as fully variable by occupied room.
Food & Beverage Costs	Variable	Apply 7.0% in the first year to sales tied to dining volume.	Leaving meal inputs in fixed overhead instead of matching them to F&B sales.
OTA Commissions & Marketing	Variable	Apply 8.0% in the first year to booking-driven revenue.	Budgeting commissions as flat spend while room sales grow.
Guest Supplies & Amenities	Variable	Apply 2.0% to guest-driven activity because amenities move with occupied stays.	Ignoring per-stay supplies and overstating contribution at higher occupancy.

How does break-even change across lean, base, and full-service hotel scenarios?

Scenario table

Break-even improves as the hotel shifts from lean to full-service because occupancy rises, variable costs fall from 18% to 16%, and fixed costs stay near $155K-$221K. That lifts monthly profit and widens the cushion above the break-even base.

Planning assumptions only; actual break-even will move with occupancy, room mix, and cost control.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean opening case	$822K	$148K	$155K	82%	$519K	Revenue sits far above the ~$189K break-even base, so launch risk is mostly control.
Stabilized base case	$1.13M	$193K	$188K	83%	$753K	This is the lender-friendly case: strong cushion above the ~$226K break-even base.
Full-service upside case	$1.38M	$220K	$221K	84%	$934K	Largest cushion, but it holds only if staffing and amenity spend stay tight.

What breaks this hotel break-even plan if demand softens or costs creep up?

Stress test

The first-year plan clears break-even with a wide cushion, but that cushion shrinks fast if occupancy slips, ADR gets discounted, or payroll, commissions, and food costs rise. The biggest watchouts are weak demand and margin pressure.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$189K	$633K cushion	Large base-case cushion supports launch.
Revenue shortfall	Monthly revenue falls 10% to about $740K.	$189K	$551K cushion	Lower occupancy or ADR cuts the room for error.
Fixed-cost increase	Fixed costs rise 10% to about $171K a month.	$208K	$614K cushion	Payroll creep and energy spikes push the floor up.
Margin pressure	Variable expenses rise from 18% to 21% of revenue.	$196K	$626K cushion	Commission pressure and food margin slippage bite.
Combined pressure	Revenue falls 10%, fixed costs rise 10%, and variable expenses rise to 21%.	$216K	$524K cushion	Weak demand plus cost inflation still leaves room, but less of it.

What should the founder verify before signing the hotel lease or debt commitment?

Founder checklist

Don’t sign until the monthly fixed load, room mix, and staffing still work at 55% Year 1 occupancy. The model breaks even in Month 1, but cash still bottoms at -$1.308M in Month 6, so the reserve plan has to hold.

1Fixed Load$155K/mo

Verify lease, purchase, or debt service stays above the $155K monthly operating base, or break-even moves out fast.

2Room Capacity116 rooms

Confirm the 50/40/20/5/1 room mix and housekeeping throughput can support the 55% Year 1 occupancy plan.

3Vendor Terms18% load

Check food, spa, guest supply, waste, security, landscaping, and maintenance terms so variable costs do not push contribution margin lower.

4Staffing Ramp22 FTE

Lock general management, front desk, housekeeping, F&B, maintenance, spa, and sales staff before opening so service can match demand.

5Cash Cushion-$1.308M

Hold enough reserve for the Month 6 cash trough, because the model needs that buffer even with Month 1 break-even.

6Launch ReadinessMonth 1

Test the reservation flow before launch so the $150K PMS setup and $5K monthly license support real bookings, not a broken intake path.