Micro Hotel Break-Even Analysis: $88K Monthly Revenue Floor

Fixed costs $32.3K Fixed monthly base

Contribution margin 86% After variable costs

Break-even revenue $37.6K Monthly target

Break-even timing Month 1 Base case timing

Break-even calculator

Test monthly room revenue against variable costs and fixed overhead to see where break-even lands.

Lean Base Full

Monthly revenue Revenue sets the pool that covers hotel overhead. $ Low demand Busy month Variable expenses Use direct costs that move with occupancy and sales. $ Tight spend High spend

Money available to cover fixed costs $120,000 $135,000 revenue - $15,000 variable expenses

Margin ratio

89%

Covers fixed costs

Yes

Fixed monthly costs Include the monthly overhead you pay even when rooms are empty. $ Lean base Heavy base

Break-even chart Revenue Total costs

Which micro hotel expenses stay fixed, and which move with occupied room nights?

Cost classification

Break-even is only useful if the monthly base is separated from room-night-driven spend. Here, the recurring operating base is $37,800/month before payroll, while commissions, supplies, processing fees, and F&B inputs move with sales volume.

Expense	Cost	Break-Even Treatment	Common Mistake
Property Lease	Fixed	Include $25,000/month in the break-even base from Month 1 through Month 60.	Flexing rent with occupancy instead of treating it as committed overhead.
Property Tax & Insurance	Fixed	Include $4,000/month even when occupancy is below plan.	Removing it in slow months because it does not feel operational.
Base Utilities	Semi-fixed	Carry the $3,500/month base, then model heavy usage separately if needed.	Treating the full amount as a per-room-night charge.
Maintenance Contracts	Semi-fixed	Use $2,000/month as the service base; increase it only when operating scale steps up.	Charging maintenance directly to each occupied room.
Hotel Manager and Assistant Manager	Semi-fixed	Model the $135,000 annual management layer as staffing capacity, not room-night volume.	Making all payroll variable and understating the break-even room count.
OTA Commissions	Variable	Apply the first-year 5.0% rate to commissionable booking revenue.	Applying commissions to direct bookings or burying them in fixed overhead.
Housekeeping Supplies	Variable	Apply the first-year 3.0% rate to sales tied to occupied rooms.	Budgeting supplies as flat overhead while occupancy rises.
Payment Processing Fees	Variable	Apply the first-year 2.0% rate to paid sales volume.	Forgetting fees when average daily rate or booking volume increases.

How does break-even shift from lean to full in a micro hotel?

Scenario table

Lean is the tightest case and sits just under the break-even floor, so add-on income or a small rate lift matters. Base and full cases build a wider cushion as room count, occupancy, and price rise.

Planning cases only; actual results will move with demand, rates, and staffing.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean opening mix	$85,941	$12,033	$76,050	86.0%	-$2,141	Sits just below break-even, so ancillary sales matter.
Base Year 3 mix	$170,549	$20,116	$86,633	88.2%	$63,800	Clears break-even with a solid cushion, but labor still needs control.
Full Year 5 mix	$269,367	$25,859	$97,217	90.4%	$146,291	Well above break-even and the strongest cushion in the set.

What breaks the break-even plan if bookings slow or costs climb?

Stress test

The base case sits close to the line, so small slips matter. A 10% room-revenue drop adds about an $8,594 monthly gap, while a 10% fixed-cost jump lifts the break-even floor to $97,273.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$88,430	$0 gap	Base case clears break-even, but barely.
Revenue shortfall	Room revenue drops 10% from weaker weekday occupancy or softer ADR.	$88,430	$8,594 gap	Weak demand can erase the monthly buffer fast.
Fixed-cost pressure	Fixed costs rise 10% across lease, taxes, utilities, and staff.	$97,273	$8,843 gap	Lease and wage inflation push the floor up.
Margin pressure	Variable load rises from 14% to 17% on OTA commissions, housekeeping, and card fees.	$91,627	$3,197 gap	Fee drag cuts contribution before cash builds.
Combined pressure	Fixed costs rise 10% and variable load rises to 17%.	$100,789	$12,359 gap	Two small shocks together can break the plan.

Can this micro hotel cover the lease, staff, and build cost before you commit?

Founder checklist

Yes, but only if the lease, payroll, and booking flow line up with the opening curve. The model needs the $37.8K monthly fixed load covered, the $459K Year 1 payroll funded, and the $565K cash low in Month 9 held before you lock more spend.

1Lease load$37.8K/mo

Confirm the lease and other fixed costs stay inside the revenue you can realistically lock in early, because the monthly base gets paid before occupancy catches up.

2Payroll ramp$459K Yr 1

Staff the Year 1 payroll plan before assuming 60% occupancy, since the wage run rate is already baked in from Month 1.

3Occupancy proof60% occ.

Verify advance bookings or comparable demand can support the 60% occupancy assumption, or the room count will not turn into enough paid nights.

4Room margin86% CM

Check that room rates and add-on sales still leave about 86% contribution after the listed variable costs, because that spread has to absorb fixed overhead.

5Booking setupPre-ads

Set booking channels and direct sales before paid marketing, so the first occupied nights do not depend on expensive traffic.

6Cash runway$565K / Month 9

Hold cash for the Month 9 low point and keep the $705K capex and 19-month payback separate from operating break-even, or the opening spend can hide a slow ramp.