Hotel and Resort Running Costs: $155K Monthly Base

Hotel and Resort Running Costs

Running a Hotel and Resort requires significant fixed overhead, starting around $155,000 per month in Year 1 (2026) just for base payroll and fixed contracts, excluding property debt or rent Your total monthly operating expenses will fluctuate based heavily on occupancy, which is forecasted at 550% in 2026 Payroll is your largest controllable expense, totaling $92,500 monthly for 22 Full-Time Equivalent (FTE) staff We break down the seven essential monthly running costs—from utilities and maintenance to variable costs like OTA commissions (Online Travel Agency commissions)—so you can accurately forecast cash flow The model shows you need a minimum cash buffer of $1308 million by June 2026 to cover initial ramp-up and capital expenditures (CapEx)

7 Operational Expenses to Run Hotel and Resort

#	Operating Expense	Expense Category	Description	Min Monthly Amount	Max Monthly Amount
1	Staff Payroll	Personnel	Estimate $92,500 monthly for 22 FTE staff in 2026, factoring in high-cost management roles.	$92,500	$92,500
2	Base Utilities	Fixed Overhead	Budget $15,000 monthly for base utilities (electricity, water, gas) before variable usage tied to occupancy.	$15,000	$15,000
3	Maint & Landscaping	Fixed Overhead	Allocate $15,000 monthly for guaranteed contracts covering General Maintenance ($7,000) and Landscaping ($8,000).	$15,000	$15,000
4	Software/Tech	Fixed Overhead	Expect $7,500 monthly for core software, including the Property Management System (PMS) license ($5,000).	$7,500	$7,500
5	Insurance/Security	Fixed Overhead	Plan for $22,000 monthly covering Property Insurance ($12,000) and essential 24/7 Security Services ($10,000).	$22,000	$22,000
6	Guest Consumables	Variable Cost	Forecast this variable cost at 20% of lodging revenue, covering consumables like toiletries and in-room amenities.	$0	$0
7	F&B/OTA Fees	Variable Cost	Manage Food & Beverage Costs (COGS) at 70% of F&B sales and OTA Commissions at 80% of booking revenue in 2026.	$0	$0
	Total	All Operating Expenses		$152,000	$152,000

What is the total monthly operating budget required to sustain a Hotel and Resort in the first year?

The total monthly operating budget for the Hotel and Resort starts with a substantial fixed base of $155,000, which must cover overhead before considering the variable expenses tied to running operations at 550% occupancy, a rate that requires careful cost management if you want to know How Much Does The Owner Of A Hotel And Resort Typically Make?

Fixed Base Budget

Fixed costs hit $155,000 per month minimum.
This covers core overhead like payroll and property insurance, defintely.
If revenue lags, this fixed burn rate sets your runway duration.
Capital planning must cover at least six months of this base spend.

Variable Cost Pressure

Variable expenses scale sharply with guest volume.
Servicing 550% occupancy demands huge inventory turnover.
Ancillary revenue margins must absorb high food and beverage costs.
Utility consumption spikes—watch energy usage closely at peak times.

Which recurring cost categories represent the largest percentage of monthly expenditure?

For the Hotel and Resort business idea, payroll and fixed overhead are the largest recurring costs, totaling $155,000 monthly before accounting for variable expenses like food costs or booking commissions; understanding this cost base is crucial, which is why you should review What Is The Most Important Metric To Measure The Success Of Your Hotel And Resort Business?. This structure means controlling staffing levels and managing fixed assets is defintely critical for profitability.

Fixed Cost Structure

Payroll runs at $92,500 per month, representing the single largest known commitment.
Fixed overhead adds another $62,500 monthly to the baseline expense.
These two categories combine for $155,000 in non-negotiable monthly spend.
If revenue dips, this high fixed base pressures contribution margin fast.

Variable Cost Levers

Variable costs include F&B COGS (Cost of Goods Sold) for dining.
OTA (Online Travel Agency) commissions eat directly into room revenue.
Focus on driving direct bookings to cut high OTA commission rates.
Manage F&B inventory tightly; high spoilage directly inflates your COGS percentage.

How much working capital or cash buffer is necessary to cover operations before consistent profitability?

You need a minimum cash buffer of $1308 million set aside to cover operational shortfalls until the Hotel and Resort business hits stable revenue by June 2026. Before we even look at that, founders need a clear picture of the initial outlay, which you can explore in detail when considering How Much Does It Cost To Open And Launch Your Hotel And Resort Business?

The Cash Runway Target

Cash runway must extend reliably to June 2026.
This buffer covers the operational burn post initial CapEx.
The required minimum liquidity stands at $1.308 billion.
This amount ensures operations continue until revenue stabilizes fully.

Operational Dependencies

Room revenue driven by occupancy is the main lever.
Ancillary streams must contribute significantly to margin.
Fixed costs are high; volume is required immediately.
If stabilization slips past the 2026 target, cash needs rise defintely.

If occupancy rates fall below the 550% forecast, how will the Hotel and Resort cover its high fixed costs?

The Hotel and Resort must immediately determine the break-even occupancy rate required to cover the $155,000 fixed base, as missing the 550% forecast means cash flow pressure starts instantly. Understanding the owner's take-home helps contextualize this risk; for reference on typical earnings, look at How Much Does The Owner Of A Hotel And Resort Typically Make?

Calculate Your Breakeven Floor

Fixed overhead stands firm at $155,000 per period.
You need the contribution margin per occupied room to cover this.
This margin includes room revenue minus direct operational costs.
The resulting occupancy rate is your absolute minimum threshold.

Cost Reduction Levers

Delay hiring for any non-critical staffing needs.
Suspend non-essential maintenance contracts right away.
Review all variable spending tied to low occupancy levels.
Defintely scrutinize vendor agreements for immediate savings.

Key Takeaways

The base fixed monthly operating cost for a Hotel and Resort begins at $155,000, derived from $92,500 in payroll and $62,500 in fixed contracts.
Staff payroll, budgeted at $92,500 monthly for 22 FTEs, constitutes the largest controllable expense category requiring careful management.
Success hinges on achieving high occupancy rates, as the model forecasts 550% occupancy in Year 1 to cover substantial fixed overhead costs.
A minimum working capital buffer of $1.308 million is necessary by mid-2026 to bridge the gap between initial capital expenditures and stabilized revenue flow.

Running Cost 1 : Staff Payroll and Benefits

Payroll Projection

Your 2026 payroll projection for 22 FTE staff sits at $92,500 per month. This estimate must cover specialized, high-cost roles, such as the General Manager earning $150,000 annually. Getting this headcount right dictates your operational runway.

Headcount Budgeting

This $92,500 monthly figure bundles salaries, mandated employer taxes, and estimated benefits. To validate this, divide $92,500 by 22 staff to get an average loaded cost of $4,205 per person monthly. The GM's $12,500 monthly salary is a major fixed component you must fund regardless of occupancy.

Inputs: Annual salaries, tax rates, benefit load factor.
Timing: Estimate locked in for 2026 projections.
Impact: This is a primary fixed operating expense.

Staffing Efficiency

Avoid hiring management too early; the $150k GM role should only be filled when operational complexity demands it. Use part-time or contract labor for specialized needs before committing to FTE status. A common mistake is over-staffing front-of-house roles too soon, which kills contribution margin.

Phase in FTE hiring post-launch.
Benchmark management salaries against local luxury comps.
Define clear KPIs for each role.

Benefit Load Reality

Remember that $92,500 is just payroll base plus minimal benefits; true total cost of employment (TCE) often runs 25% to 35% higher when factoring in employer payroll taxes and full insurance premiums. This estimate might be light, defintely check your local tax burden.

Running Cost 2 : Base Utilities and Energy

Set Utility Floor

You must set aside $15,000 monthly for the foundational utility costs of your resort before occupancy spikes. This baseline covers essential electricity, water, and gas needed just to keep the doors open and systems running, regardless of how many guests are checking in or out. This defintely excludes consumption tied to amenity usage.

Estimate Inputs

This $15,000 monthly budget is your fixed utility floor for the Haven Crest Resorts operation. It includes minimum service fees for electricity, water, and natural gas required for common areas and standby systems. You need historical quotes for commercial property minimums, not per-guest usage rates, to lock this figure in your initial budget.

Electricity minimums
Water base charges
Gas service fees

Control Usage

Managing this cost means aggressively tracking usage above the baseline, especially during peak seasons or high occupancy events. A common mistake is ignoring the delta between base usage and actual consumption. Focus on smart HVAC controls and energy-efficient common area lighting to keep variable spikes manageable.

Audit HVAC performance quarterly
Install low-flow fixtures now
Negotiate fixed-rate energy contracts

Variable Risk

Remember, this $15,000 is just the floor. If your resort hits 95% occupancy in July, expect electricity and water bills to jump significantly above this estimate, directly impacting your contribution margin. You must model the per-guest utility cost to forecast true operational expense during busy periods.

Running Cost 3 : Maintenance and Landscaping

Lock In Grounds Costs

You must budget $15,000 monthly for guaranteed service contracts to maintain the upscale look of Haven Crest Resorts. This covers both General Maintenance at $7,000 and Landscaping at $8,000 monthly. Failing here directly impacts guest perception and your Average Daily Rate (ADR).

Fixed Grounds Budget

This $15,000 covers essential upkeep that cannot flex with occupancy, unlike variable guest costs. It locks in the resort's curb appeal right away. You need signed contracts detailing scope for both maintenance and landscaping services before launch. Here’s the quick math on this fixed overhead.

General Maintenance: $7,000/month.
Landscaping Services: $8,000/month.
This cost is non-negotiable for appearance.

Managing Grounds Contracts

Since landscaping is $8,000, avoid paying for excessive seasonal planting if the resort is less busy. Negotiate annual contracts that allow for reduced scope during the slow season, maybe a 10% reduction buffer built in. Don't bundle maintenance if one vendor is defintely cheaper on grounds work alone.

Require clear SLAs (Service Level Agreements).
Benchmark landscaping against local 5-star resorts.
Avoid paying for unused emergency call-out fees.

Appearance Risk

If the landscaping budget slips, guest satisfaction scores will drop fast; this is non-negotiable upkeep for premium travelers. Deferred maintenance costs way more later when you have to replace entire systems instead of servicing them. This $15k spend supports your luxury positioning.

Running Cost 4 : Software and Tech

Fixed Tech Commitment

Your core technology stack requires $7,500 monthly in recurring operational expenses. This covers essential systems needed to run the resort smoothly. This figure includes the main Property Management System and necessary administrative tools.

Tech Stack Breakdown

This monthly software spend is a fixed operational cost, not tied to occupancy volume. The $5,000 is for the Property Management System (PMS) license, handling reservations and guest profiles. The remaining $2,500 covers general Administrative Software needs for finance or HR.

PMS license: $5,000/month
Admin software: $2,500/month
Total fixed tech OPEX: $7,500

Managing Tech Spend

Avoid paying for features you won't use immediately in the PMS. Negotiate upfront implementation fees rather than rolling them into monthly costs if possible. Check if the administrative software can be bundled or replaced by a module within the PMS suite to save money, defintely.

Audit feature usage quarterly.
Negotiate multi-year license discounts.
Consolidate overlapping software functions.

Tech Budget Anchor

The $7,500 monthly software commitment is a non-negotiable baseline expense for operating a modern, upscale resort. It must be covered before variable costs scale up with guest volume, sitting below payroll ($92,500) but above utilities ($15,000).

Running Cost 5 : Fixed Insurance and Security

Fixed Protection Budget

You must budget $22,000 monthly for essential fixed protection covering your resort property and guest safety. This expense bundles $12,000 for Property Insurance and $10,000 for round-the-clock security services.

Essential Coverage Breakdown

This $22,000 is a fixed overhead cost, meaning it doesn't change with occupancy. The $12,000 Property Insurance must cover the full replacement value of the upscale lodging and amenities. The $10,000 security budget funds mandated 24/7 monitoring and on-site personnel required for a luxury destination.

Property Insurance: $12,000 monthly
24/7 Security Services: $10,000 monthly

Managing Fixed Risk Costs

Since these are fixed, focus on negotiating better long-term rates rather than cutting service levels. Review the Property Insurance deductible annually; raising it slightly can lower the $12,000 premium if you can absorb the initial risk. You should defintely ensure security contracts are tiered based on actual required coverage zones.

Benchmark security costs against similar resort footprints
Lock in multi-year insurance rate guarantees
Review coverage limits every 18 months

Security Cost Reality

Do not view the $10,000 security line item as negotiable based on low occupancy; 24/7 coverage is non-negotiable for liability protection at a premier resort. Failing to maintain this standard exposes you to massive uninsured losses, far exceeding this monthly spend.

Running Cost 6 : Variable Guest Costs

Scaling Guest Consumables

Variable Guest Costs scale directly with occupancy, unlike fixed overheads like payroll. We forecast this line item at exactly 20% of total lodging revenue. This covers necessary consumables such as toiletries, linens, and in-room amenities for every stay. It’s a crucial metric for accurate contribution margin analysis.

Estimating Consumable Spend

This cost includes items that must be refreshed after each guest checks out. You need projected room revenue to calculate the spend, applying the 20% rate. For example, if monthly room revenue is $150,000, budget $30,000 for these variable items. Understand that this excludes F&B COGS (Running Cost 7).

Inputs needed: Lodging Revenue and 20% factor.
Covers: Toiletries and linens.
Scales: Directly with occupancy rate.

Controlling Amenity Costs

Since you target affluent travelers, quality cannot drop, but waste must be managed. Negotiate annual contracts for high-volume items like towels and amenities to lock in better pricing tiers. Track linen loss rates; excessive replacement due to damage inflates this 20% estimate quickly. Aim for 18% if possible through tight inventory control.

Negotiate bulk pricing upfront.
Monitor linen replacement frequency.
Avoid per-guest overstocking.

The Occupancy Risk

If your occupancy forecasts are too high, this variable cost will hit your cash flow hard. Remember, this cost applies only to lodging revenue, not ancillary sales like the spa or bar. Miscalculating the linkage between room nights and consumable usage deflates your margins; it’s defintely a lever you must monitor weekly.

Running Cost 7 : F&B COGS and OTA Fees

F&B and OTA Levers

For this Hotel and Resort concept, control is tight: F&B COGS must stay at 70% of food sales, and Online Travel Agency (OTA) commissions need to hit 80% of booking revenue in 2026. Since both scale directly with sales, managing these variable rates dictates overall profitability.

Cost Inputs

F&B COGS covers ingredients for restaurant and bar sales. You need accurate daily tracking of inventory usage against sales receipts to maintain that 70% target. OTA fees are commissions paid to third-party booking sites, set at 80% of the room revenue generated through them.

Track ingredient usage vs. sales.
Verify OTA statements monthly.
Know your true F&B margin.

Cost Control Tactics

To manage these high variable costs, push guests toward direct bookings to cut the 80% OTA commission. For F&B, negotiate better supplier pricing or slightly increase menu prices, keeping the COGS ratio below 70%. Defintely watch for waste.

Push direct booking channels.
Negotiate supplier volume discounts.
Monitor plate waste closely.

Margin Impact

If your average F&B sales are $10,000, the COGS cost is $7,000, leaving only $3,000 contribution before labor. If a room booking costs you $800 in OTA fees, that revenue stream is almost entirely consumed by the commission structure.