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Key Takeaways
- The baseline fixed monthly operating cost for a casino hotel is projected to exceed $11 million, demanding substantial initial liquidity management.
- Payroll is the largest single recurring expense, accounting for $717,500 monthly and representing the primary fixed labor commitment.
- Founders must manage a critical peak cash deficit of $301 million, despite the business model projecting operating break-even within the first month.
- Controlling the 100% variable Gaming Taxes is essential for margin improvement, as this cost scales directly with gaming revenue generation.
Running Cost 1 : Payroll & Staffing
Payroll Dominance
Payroll is your biggest hurdle in Year 1, hitting $717,500 monthly. This covers 204 FTEs split between gaming and hotel staff, establishing headcount as the primary fixed cost driver for the entire operation.
Headcount Cost
This $717,500 monthly payroll estimate covers 204 full-time equivalents (FTEs), meaning salaried or hourly staff working standard hours, needed for both gaming floors and hotel operations. Since this dwarfs other fixed costs like utilities ($80k) or maintenance ($150k), managing these salaries defintely dictates your initial burn rate. If onboarding takes 14+ days, churn risk rises.
- Inputs: 204 FTEs Ă— Avg. Salary/Benefits
- Impact: Largest fixed expense category.
- Benchmark: Must be covered before gaming tax hits.
Staffing Levers
To control this massive fixed cost, optimize scheduling rather than cutting roles outright, especially in gaming where coverage is non-negotiable. Cross-train hotel staff to assist during peak check-in/out times to avoid hiring dedicated overflow staff. Be careful not to understaff security, which costs $60,000 fixed monthly anyway.
- Cross-train hotel and F&B staff.
- Use part-time roles for predictable troughs.
- Audit overtime usage weekly.
Break-Even Focus
Because payroll is so high, your break-even point depends heavily on achieving high room occupancy and consistent gaming volume early on. If revenue projections slip, this $717,500 expense floor means you'll need quick access to working capital to bridge the gap until ancillary revenue kicks in.
Running Cost 2 : Property Maintenance
Budget $150K Monthly
Set aside $150,000 monthly for Property Operations & Maintenance. This covers the upkeep of your large physical asset base and all necessary capital equipment replacement schedules for the integrated resort. This is a critical fixed cost that directly supports the five-star guest experience you promise.
Asset Upkeep Inputs
This $150,000 is fixed overhead for maintaining the physical resort and casino infrastructure. You need detailed quotes for major system replacements, like HVAC for the high-energy casino floor, and service contracts for hotel elevators. It sits right next to your $717,500 monthly payroll commitment.
- Track capital needs separately.
- Budget for specialized gaming equipment.
- Ensure compliance inspections are covered.
Controlling O&M Costs
Do not cut preventative maintenance to save cash; deferring work on major systems guarantees massive future failure costs. Focus on bundling vendor contracts now for better rates across hotel and gaming areas. A common mistake is underestimating the specialized labor required for high-end spa equipment.
- Negotiate multi-year service deals.
- Audit energy consumption quarterly.
- Prioritize assets affecting guest flow.
Fixed Cost Pressure
This $150k is fixed, unlike your 30% Food & Beverage Cost of Goods Sold or variable gaming taxes. If revenue targets are missed, this fixed cost heavily pressures your contribution margin, making accurate revenue forecasting defintely crucial for managing cash flow.
Running Cost 3 : Gaming Taxes & Fees
Tax Cliff Warning
Your gaming tax liability jumps to a flat 100% of gaming revenue starting in 2026. This isn't a gradual increase; it's an immediate margin wipeout if you don't model this correctly now. Daily revenue tracking becomes the single most important compliance function to avoid penalties.
Tracking Gaming Revenue
This variable tax covers regulatory fees directly tied to wagers placed on the casino floor. To forecast this, you need projected daily gaming revenue figures, which feed directly into your 2026 operating model. If gaming revenue hits $1 million that month, the tax bill is $1 million, effectively eliminating contribution from that stream unless the rate changes.
- Input: Daily Gross Gaming Revenue (GGR)
- Impact: 100% liability in 2026
- Action: Integrate compliance reporting now
Compliance Focus
Optimization here means rigorous compliance, not cost cutting, since the rate is fixed by law. You must implement systems that capture every transaction accurately by January 1, 2026. A common mistake is relying on monthly reconciliation; this needs real-time, auditable records. If onboarding takes 14+ days, churn risk rises.
Margin Check
Before 2026, ensure your projected gaming contribution margin is significantly positive to absorb the full 100% tax hit when it lands. This tax structure forces gaming revenue to become a pure pass-through expense, shifting all profitability dependence onto hotel and F&B operations. Honestly, you need to know your baseline margin now.
Running Cost 4 : Utilities
Fixed Utility Burn
Utilities represent a substantial, predictable fixed cost for your integrated resort operation. You must budget $80,000 monthly to cover essential power, water, and gas needed to run both the hotel accommodations and the high-energy casino floor simultaneously.
Cost Inputs and Allocation
This $80,000 figure bundles power, water, and gas across the entire property footprint. Because the casino floor demands constant, high-load power 24/7, a large portion of this cost is effectively fixed overhead, regardless of minor occupancy fluctuations. You need quotes based on the square footage of the gaming area versus the hotel rooms. Honestly, this is one of your easiest fixed costs to forecast.
- Covers all power, water, and gas.
- Casino load drives primary consumption.
- Fixed monthly allocation required.
Optimization Levers
You can't easily cut utilities, but you can manage the rate of consumption growth against your revenue targets. The biggest mistake is ignoring efficiency upgrades in the hotel wing, assuming the casino load is the only driver. Look at chiller efficiency and smart lighting controls to prevent usage creep. If onboarding takes 14+ days, churn risk rises.
- Audit HVAC system efficiency.
- Implement smart, zoned lighting.
- Benchmark against similar-sized resorts.
Context in Overhead
At $80,000, utilities are smaller than payroll ($717,500) but larger than the $40,000 portion of your insurance. This fixed cost must be covered before you start calculating contribution margin from gaming or room revenue. It's a baseline requirement for keeping the lights on and the air conditioning running for high-value guests.
Running Cost 5 : Food & Beverage COGS
COGS Baseline Set
Food and Beverage Cost of Goods Sold (COGS) is projected to hit 30% of related sales starting in 2026. This high baseline means managing spoilage and securing favorable vendor contracts are immediate operational priorities, not future concerns. You need tight systems now.
Modeling Ingredient Costs
F&B COGS covers the direct cost of ingredients sold through your resort restaurants and bars. To model this accurately, you must track purchase costs for all consumables against actual sales volume. If F&B revenue is $1 million in 2026, expect $300,000 in direct material costs. Defintely track purchase costs for all consumables against actual sales volume.
- Audit supplier invoices weekly.
- Implement strict portion control.
- Use slow-moving inventory first.
Controlling the 30%
Controlling this 30% figure requires rigorous operational discipline, especially given the scale of a resort. Focus on menu engineering to push high-margin items and reduce waste from low-volume dishes. Negotiate bulk purchasing agreements with primary food distributors early on.
- Audit supplier invoices weekly.
- Implement strict portion control.
- Use slow-moving inventory first.
Margin Impact
Since F&B COGS is a major variable cost driver, any failure in inventory tracking directly erodes your overall operating margin. If you miss the 30% target by just 2 percentage points, that’s $20,000 lost per $1 million of F&B revenue. This cost demands executive oversight.
Running Cost 6 : Marketing & Loyalty
Marketing Spend Mandate
Marketing spend drives volume. For 2026, plan to commit 40% of total revenue directly to Marketing & Loyalty Programs. This aggressive allocation is necessary to hit your ambitious 650% occupancy rate goal. Without this investment, achieving that growth target is simply not realistic.
Marketing Spend Basis
This 40% allocation is based on total revenue, not just room revenue. You need accurate projections for both room nights and ancillary spend to calculate the actual dollar amount needed in 2026. It's a variable cost tied directly to top-line success. Honestly, this is a big bet on demand generation.
- Need 2026 total revenue forecast.
- Calculate 40% of that total.
- This funds customer acquisition.
Optimizing Loyalty Spend
Focus loyalty spend on high-value segments, like high-net-worth individuals. Track the Return on Ad Spend (ROAS) rigorously. A common mistake is spending too much on low-yield local traffic instead of destination gamers who spend more on gaming and F&B.
- Measure spend per occupied room-night.
- Incentivize repeat casino visits.
- Watch gaming tax impact on margins.
Volume Dependency
Marketing isn't optional; it's the engine for volume. Given that gaming taxes hit 100% of gaming revenue in 2026, marketing must pull volume through the high-margin hotel and F&B streams to cover massive fixed overheads like $717,500 monthly payroll.
Running Cost 7 : Insurance & Security
Insurance & Security Baseline
Your combined Insurance and Security fixed costs hit $100,000 monthly right out of the gate. This high baseline reflects the intense regulatory scrutiny and the need to protect significant physical and financial assets inherent in running a casino hotel operation. That’s a major fixed drain before your first guest checks in.
Cost Breakdown & Inputs
This $100,000 covers mandatory liability coverage for gaming and lodging, plus the operational budget for Security Operations. You need quotes for property/casualty insurance and contracts for security staffing (guards, surveillance tech). This cost is separate from the massive $717,500 monthly payroll, but security staff often overlap roles.
- Insurance: $40,000 fixed monthly premium.
- Security: $60,000 fixed monthly operations.
- Asset protection dictates this high fixed spend.
Managing Fixed Risk
Managing this cost means optimizing security deployment, not cutting corners on mandated coverage. Negotiate annual insurance deductibles upward if cash flow allows, transferring risk for a lower premium. Also, review security tech contracts versus in-house staffing costs; sometimes leasing systems is better than buying outright. Don't skimp on compliance audits.
- Negotiate higher deductibles first.
- Audit security tech contracts closely.
- Benchmark guard staffing ratios against peers.
Regulatory Link
Because gaming taxes are a variable 100% of gaming revenue starting in 2026, keeping security tight directly impacts your compliance audit success. Any security lapse leads to regulatory fines, which stack on top of the $100k fixed spend. Defintely budget for quarterly compliance checks to keep operations clean.
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Frequently Asked Questions
Total fixed operating costs, including the $717,500 monthly payroll and $395,000 in overhead, start at $111 million in 2026 You must also account for variable expenses like Gaming Taxes, which are 100% of revenue, and Food & Beverage COGS at 30%