Motel Break-Even Analysis: 47% Occupancy To Cover Monthly Costs

Fixed costs $34.9K Monthly base

Contribution margin 81% After variable cost

Break-even revenue $43.1K Monthly target

Break-even timing Month 2 Launch point

Break-even calculator

Use this calculator to test motel monthly room revenue, variable costs, and fixed overhead against break-even.

Lean Base Full

Monthly revenue Room sales and add-ons create the cash that covers fixed costs. $ Lower sales Higher sales Variable expenses OTA fees, ads, and guest-supply costs move with sales. $ Lower costs Higher costs

Money available to cover fixed costs $98,500 $115,500 revenue - $17,000 variable expenses

Margin ratio

85%

Covers fixed costs

Yes

Fixed monthly costs Lease, wages, and site overhead must be covered each month. $ Lower overhead Higher overhead

Break-even chart Revenue Total costs

Which motel expenses are fixed and which move with room sales?

Cost classification

Break-even only works if fixed monthly bills are separated from stay-driven costs. Treat the $18,000 property lease like a room-night expense, and the required occupancy target will look falsely low.

Expense	Cost	Break-Even Treatment	Common Mistake
Property Lease	Fixed	Include the full $18,000 each month before any room revenue.	Spreading lease only across occupied rooms.
General Manager payroll	Fixed	Include the $90,000 salary at 1.0 full-time equivalent across the year.	Reducing management payroll when occupancy dips.
F&B Supplies	Variable	Apply the 5% first-year assumption to food and beverage sales.	Using the 5% rate against total room revenue.
Room Consumables	Variable	Apply the 3% first-year assumption as rooms are sold.	Treating linens, toiletries, and supplies as flat overhead.
Online travel agency commissions	Variable	Apply the 8% first-year rate to booking revenue sold through that channel.	Charging commissions on direct bookings too.
Utilities	Semi-variable	Keep the $6,500 monthly baseline, then flex usage with occupancy.	Making the full utility bill move with room sales.
Housekeeping Staff	Semi-variable	Scale labor with occupied rooms and room turnover.	Modeling all housekeeping payroll as fixed.
Front Desk Staff	Semi-fixed	Add coverage in staffing steps, starting from 2.0 full-time equivalents in the first year.	Scaling front desk payroll smoothly with revenue.

How does break-even change from lean to full motel occupancy?

Scenario table

The lean case clears fixed costs, but the buffer is still thin. By the base and full cases, higher occupancy and room rates lift the cushion fast, so break-even risk drops even with lower variable load.

Planning assumptions only; 30-day monthly math hides seasonality.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean case	$1.095m	$208k	$750k	81.0%	$137k	Positive, but the cushion is thin.
Base case	$1.454m	$256k	$845k	82.4%	$353k	Healthy cushion; break-even risk is lower.
Full case	$1.782m	$289k	$875k	83.8%	$618k	Strong cushion; break-even risk is low.

What breaks the motel break-even plan?

Stress test

The base case clears break-even with a $137k monthly cushion, but that room for error is not wide. A 10% booking drop, higher fixed costs, or more paid-channel business can cut that cushion fast, and the combined shock turns it into a $76k gap.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$925k	$137k cushion	Base plan clears break-even, but the cushion is modest.
Revenue shortfall	Room revenue falls 10% to about $985k.	$925k	$48k cushion	Soft weekday bookings would eat most of the monthly cushion.
Fixed-cost pressure	Fixed costs rise 10% to about $825k a month.	$1,018k	$62k cushion	Utility spikes and surprise maintenance push break-even higher.
Margin pressure	Variable expenses rise from 19% to 24% of revenue.	$986k	$82k cushion	More paid-channel bookings and fees squeeze contribution margin.
Combined pressure	Revenue drops 10%, variable load hits 24%, and fixed costs rise 10%.	$1,086k	$76k gap	This turns the plan negative and needs a fast cost reset.

Can this motel cover overhead before you lock in the lease and buildout?

Founder checklist

Before you lock the lease and start the buildout, test whether this motel can cover its $74,950 monthly fixed load at 55% occupancy and a weighted ADR near $109. The model hits operating break-even by Month 2, but cash still bottoms at negative $273k in Month 11, so reserves matter.

1Demand Proof990 nights/mo

Confirm the 60-room layout and parking access can really support about 990 occupied room nights a month at 55% occupancy, or the break-even date will slip fast.

2Lease Load$74.95K/mo

Lock the $18,000 property lease only if the full fixed stack, including utilities, taxes, insurance, maintenance, software, security, and payroll, still fits the monthly break-even plan.

3Margin Mix81% CM

Price against 5% F&B supplies, 3% room consumables, 8% OTA commissions, and 3% marketing, because that leaves about 81% contribution margin before fixed costs.

4Staffing Ramp10.0 FTE

Verify the Year 1 team of 10.0 FTE, including 2.0 front desk and 3.0 housekeeping, can run the motel at the forecast load without adding labor too early.

5Cash LowMonth 11

Plan reserves for the Month 11 cash trough, because the model drops to negative $273,000 and renovation spend cannot outrun operating cash.

6Capex Split$1.455M

Keep the $1.455 million buildout separate from operating break-even, because the motel can show a Month 2 operating breakeven while capex still drains cash.