Repurposed Hotel Break-Even Analysis: Month 33 Revenue Threshold

Fixed costs $43.5K/mo Year 1 base

Contribution margin 92.5% After variable fees

Break-even revenue $47.1K/mo Monthly target

Break-even timing Month 33 Model breakeven

Break-even calculator

Test how monthly revenue, variable expenses, and fixed costs shape break-even for a repurposed hotel plan.

Lean Base Full

Monthly revenue More monthly revenue leaves more room to cover fixed costs. $ Low revenue High revenue Variable expenses These are direct costs that rise with monthly property activity. $ Lower direct cost Higher direct cost

Money available to cover fixed costs $4,371,000 $4,650,000 revenue - $279,000 variable expenses

Margin ratio

94%

Covers fixed costs

Yes

Fixed monthly costs This is the monthly overhead the margin has to cover. $ Lean overhead Full overhead

Break-even chart Revenue Total costs

Which expenses are fixed and which move with sales in a hotel conversion break-even model?

Cost classification

Break-even gets shaky when fixed overhead, sales-based fees, and step-up payroll sit in one bucket. Separate them so Month 33 breakeven reflects real monthly burn, not a blended average that hides occupancy and staffing risk.

Expense	Cost	Break-Even Treatment	Common Mistake
Corporate Office Rent	Fixed	Carry $10,000 per month from Month 1 through Month 60, regardless of occupancy or sale timing.	Tying office rent to leased units or property revenue.
Legal & Accounting Fees	Fixed	Include $3,500 per month as recurring overhead before project-level profit is measured.	Burying all legal and accounting spend inside acquisition or construction budgets.
Insurance - Corporate	Fixed	Model $1,200 per month as corporate coverage, separate from any property-level insurance.	Combining corporate insurance with building-specific coverage.
Software Subscriptions	Fixed	Keep $800 per month in overhead through Month 60, even when no property is producing revenue.	Dropping software after launch instead of carrying it through operations.
Property Management Fees	Variable	Apply to revenue at 5.0% in Years 1 to 2, 4.5% in Year 3, and 4.0% in Years 4 to 5.	Treating management fees as fixed and overstating margin at low revenue.
Leasing Commissions & Marketing	Variable	Apply to revenue at 2.5% in Years 1 to 2, 2.0% in Year 3, and 1.5% in Years 4 to 5.	Using one flat marketing number after lease-up activity changes.
Utilities & Office Supplies	Semi-variable	Use the $700 monthly office amount as the base, then track any usage-linked utility load separately.	Ignoring vacant-room base load when converted space is not fully occupied.
Staffing	Semi-fixed	Step payroll from $310,000 in Year 1 to $715,000 in Year 3 as roles move to full staffing.	Smoothing payroll evenly and missing the cash hit from new hires.

How does break-even shift from a lean ramp to a full stabilization in a repurposed hotel conversion?

Scenario table

The break-even point moves mostly with lease-up speed and staff load. Lean and base stay tight, while the full case has the best cushion only if collections and operations stay on track.

Planning assumptions only; actual break-even will move with occupancy, collections, and staffing mix.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean ramp case	$471k	$35k	$435k	92.5%	$0	Lease-up slips can push it below break-even fast.
Base case	$703k	$53k	$650k	92.5%	$0	This is the tight middle case.
Full stabilized case	$827k	$54k	$773k	93.5%	$0	Stable collections give the cleanest cushion.

What breaks the break-even plan for a repurposed hotel?

Stress test

The plan has little room for error. Lease-up delays, cost creep, or margin pressure can push it below break-even, and the model already bottoms at -$69.427m in Month 32 before the business fully stabilizes.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$827k	$0 gap	Base case is razor-thin; any delay or overrun hurts.
Revenue shortfall	Monthly revenue slips 10% below break-even to about $744k.	$827k	$83k gap	Lease-up delays or empty units create fast cash drag.
Fixed-cost pressure	Fixed monthly costs rise 10% to about $850k.	$909k	$82k gap	Payroll, insurance, or utilities can push it past break-even.
Margin pressure	Variable expenses rise and cut contribution margin to 90%.	$849k	$22k gap	A small fee or utility squeeze erodes the cushion.
Combined pressure	Revenue falls 10%, fixed costs rise 10%, and margin slips.	$944k	$200k gap	Delayed permits or vendor bids above budget would stack up fast.

What should the founder verify before signing the purchase and starting renovation?

Founder checklist

Do not sign the purchase or start renovation until the buy price, build scope, staffing ramp, fee stack, and reserve need all clear the model. Cash bottoms in Month 32 at about -$69.4M, and breakeven in Month 33 still depends on lease-up holding.

1Lease-Up DemandMonth 33

Get signed leasing or contract income in hand before marketing spend, because Month 33 breakeven only works if occupancy stays on plan.

2Purchase Budget$60.2M

Confirm the owned acquisition price stays within the $60.2M total purchase budget, or the return math changes fast.

3Build Scope$39.5M

Lock the renovation scope at $39.5M and verify permit and code readiness before construction starts, because delay pushes the payback clock.

4Fee Stack7.5% Y1

Check that property management plus leasing and marketing stay at 7.5% in Year 1 and ease to 5.5% later; that is the margin you keep.

5Payroll Ramp$310K → $715K

Make sure the team can run from $310K payroll in Year 1 to $715K in Year 3, since understaffing during the ramp hurts lease-up and control.

6Cash CushionMonth 32

Hold enough reserve for the Month 32 cash low of about -$69.4M and the $17.7K monthly fixed load, or a small delay becomes a liquidity problem.