- Pick a planning period and enter rooms and days.
- Enter ADR and any average ancillary revenue per occupied room.
- Add your average distribution commission rate, if any.
- Enter variable cost per occupied room-night and total fixed costs.
- Optionally add a target profit and expected occupancy.
- Press Calculate to see break-even occupancy and rooms sold.
| Rooms | Days | ADR | Ancillary | Commission | Variable cost | Fixed costs | Target profit | Break-even occupancy |
|---|---|---|---|---|---|---|---|---|
| 120 | 30 | $125.00 | $15.00 | 10.00% | $30.00 | $120,000.00 | $25,000.00 | 41.96% |
What break-even occupancy represents
Break-even occupancy is the share of available room nights you must sell to cover fixed costs, after variable costs and distribution fees. It converts your budget into an operational target, such as rooms sold per day, that teams can monitor. For example, 80 rooms over 30 days create 2,400 available room nights. If the calculator returns 55%, you need about 1,320 occupied nights to avoid a loss.
Key inputs that drive the break-even point
Room count and days define capacity, while ADR and ancillary revenue define earning power per occupied night. Fixed costs usually include payroll, lease, insurance, technology, and property charges that do not change with short-term occupancy. Variable costs track items tied to guests, including housekeeping labor, linens, amenities, breakfast, and incremental utilities. Many full-service hotels see variable costs between $20 and $45 per occupied night, depending on service level.
Interpreting contribution margin and channel costs
Contribution margin equals net revenue per occupied night minus variable cost. Net revenue adjusts gross revenue for commission, which is common for OTA and agent bookings. Commission rates often range from 10% to 25%, and they directly reduce net revenue. A higher commission pushes break-even occupancy upward, even when ADR stays flat. Improving direct booking share, negotiating lower rates, or shifting to lower-fee channels can lift contribution margin quickly.
Using scenarios for pricing and staffing decisions
Use the expected occupancy field to compare plan versus forecast. If expected profit falls short, test options: raise ADR, add paid upgrades, bundle parking, optimize minimum stays, or reduce variable costs through smarter staffing. Even small changes matter. A $5 ADR increase across 1,500 occupied nights adds $7,500 in gross revenue before commission. Blend pricing and mix.
Common data checks for reliable results
Validate inputs with recent P&L and operating reports, then update them by season. Keep the planning period consistent with the fixed-cost window you are budgeting. Use weighted averages for ADR and commission based on booking mix, not best-case rates. If calculated break-even exceeds 100%, capacity cannot cover costs at current margins. If margin becomes non‑positive, review rates, cost allocation, and commission assumptions immediately.
Does it include taxes and service charges?
Use net room revenue assumptions. If taxes are passed through and remitted, exclude them. If service charges increase revenue you keep, include them in ancillary revenue or adjust ADR to reflect your retained amount.
How do I estimate variable cost per occupied room?
Start with housekeeping labor, laundry, amenities, breakfast, and incremental utilities. Divide total variable expenses for the period by occupied room nights. Use different values for peak and low seasons if costs vary.
What if I have multiple room types and rates?
Use weighted averages. Compute ADR and commission using revenue shares by room type and channel. If costs differ greatly by room class, run separate scenarios and compare break-even results for each segment.
Why is break-even occupancy above 100%?
Your contribution margin is too low for the fixed-cost load. Reduce commission, raise ADR, increase ancillary revenue, or lower variable costs. If capacity still cannot cover costs, revisit staffing, leases, or the planning period.
How does commission change the result?
Commission reduces net revenue per occupied night, so the contribution margin shrinks. A 5% increase in commission can meaningfully raise break-even occupancy, especially when ADR is modest and variable costs are high.
Can I use it for weekly planning?
Yes. Set days to 7 and enter weekly fixed costs or prorate monthly costs. Keep ADR and variable cost consistent with weekly patterns, then compare the calculated break-even to your forecasted occupancy.