Calculator inputs
Example data table
| Scenario | Rooms | Days | ADR | Variable | Commission | Other Rev | Fixed | Profit |
|---|---|---|---|---|---|---|---|---|
| Base | 60 | 30 | $120 | $18 | 12% | $8 | $82,000 | $10,000 |
| Higher ADR | 60 | 30 | $140 | $18 | 12% | $8 | $82,000 | $10,000 |
| Lower Fixed Costs | 60 | 30 | $120 | $18 | 12% | $8 | $70,000 | $10,000 |
| Lower Commission | 60 | 30 | $120 | $18 | 8% | $8 | $82,000 | $10,000 |
Tip: run each scenario by entering values above and submitting.
Formula used
How to use this calculator
- Set your period by entering rooms available and days.
- Enter ADR and variable cost per occupied room-night.
- Add commission percentage if you rely on paid channels.
- Include other revenue per occupied room-night for upsells.
- Enter fixed costs for the same period and an optional profit goal.
- Use seasonality to stress-test high or low demand periods.
- Submit to see the break-even occupancy above this form.
- Download CSV or PDF to share scenarios with stakeholders.
Insights
Break-even occupancy as a planning KPI
Break-even occupancy converts your cost structure into a single, comparable performance target. By combining inventory, ADR, variable expenses, and fixed overhead, it highlights the minimum demand level needed to sustain operations. Finance teams use it to validate budgets, while revenue managers track it against forecasted occupancy to detect margin pressure early. Owners can also benchmark properties with different sizes by comparing break-even percentages rather than absolute dollars each week.
Understanding contribution per occupied room-night
Contribution is the cash generated by one sold room-night after channel fees and variable servicing costs. It is not the same as ADR, because commissions reduce realized room revenue and variable costs rise with each stay. Increasing contribution by even a few dollars can materially reduce required occupancy across an entire month. Focus on high-impact levers like upsells, longer stays, and service design that lowers cost without hurting guest scores.
Channel costs and seasonality sensitivity
Distribution strategy shapes break-even. A higher commission rate lowers net room revenue, forcing more occupancy to cover the same fixed costs. Seasonality stress tests the model by shifting ADR and service intensity. In peak periods, higher pricing often improves contribution faster than costs increase, improving the break-even threshold. In low season, consider value-add packages that protect rate while increasing other revenue per stay.
Scenario design for revenue management
Use scenarios to evaluate pricing, promotions, and cost controls. Compare a base case with higher ADR, lower commission, or reduced fixed expenses. Add other revenue to reflect parking, breakfast, or resort fees. When break-even exceeds 100%, the scenario indicates structural issues that require repositioning, renegotiation, or expense redesign. This is also a useful check before launching discounts, because a lower ADR may raise break-even faster than it lifts demand.
Using outputs for budgeting and staffing
Translate the required occupied room-nights into daily targets to guide staffing and purchasing. Pair break-even total revenue with cash-flow planning and debt covenants. Share the CSV or PDF with stakeholders to document assumptions and align teams. Revisit inputs monthly to keep plans realistic as market conditions change. Tracking contribution alongside occupancy helps explain why “full” weeks can still miss profit goals.
FAQs
1) What does break-even occupancy mean?
It is the occupancy percentage where contribution from sold room-nights equals fixed costs, plus any profit target you set. Below it, the period loses money; above it, you generate operating surplus.
2) Should I include taxes in ADR?
Use the ADR you actually keep. If taxes are passed through and not retained, exclude them. If taxes reduce your realized rate or add fees, reflect that impact through a lower ADR or higher variable costs.
3) How do I estimate variable cost per occupied room-night?
Start with housekeeping labor, linen, amenities, and guest utilities. Divide total variable spending by occupied room-nights for the same period. Update the estimate when service levels, wage rates, or occupancy patterns change.
4) What counts as fixed costs?
Include costs that do not change much with occupancy, such as base payroll, rent or lease, insurance, property taxes, software, and core utilities. Exclude per-stay expenses that rise directly with occupied rooms.
5) Why can break-even exceed 100%?
If contribution per occupied room-night is too low relative to fixed costs and profit goals, the required occupied room-nights can exceed available inventory. That indicates the current pricing, channel mix, or cost structure is unsustainable for the period.
6) How often should I recalculate?
Recalculate monthly or whenever there is a meaningful change in ADR, distribution fees, staffing costs, or demand outlook. Frequent updates help you respond quickly with pricing actions and expense controls.