| Item | Sample value |
|---|---|
| Rooms | 50 |
| Days | 30 |
| Occupancy | 65% |
| Fixed costs | ₨450,000.00 |
| Variable cost / occ night | ₨1,200.00 |
| Add-on revenue / occ night | ₨500.00 |
| Profit target | 15% |
| Taxes/fees | 13% |
- Choose a period (days) that matches your budget.
- Enter fixed costs and variable cost per occupied night.
- Set occupancy, add-on revenue, and taxes/fees if needed.
- Pick a profit target mode and percentage.
- Click Calculate, then export CSV or PDF.
- Available room-nights = rooms × days
- Occupied room-nights = available room-nights × occupancy%
- Variable cost total = occupied room-nights × variable cost
- Add-on revenue total = occupied room-nights × add-on revenue
- Total cost to recover = fixed costs + variable cost total + one-time recovery amount
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Required total revenue:
If using margin on revenue: revenue = cost ÷ (1 − margin).
If using markup on cost: revenue = cost × (1 + markup). - Required room revenue = required total revenue − add-on revenue total
- Required net ADR = required room revenue ÷ occupied room-nights
- Required gross ADR = net ADR × (1 + taxes/fees%)
Cost recovery inputs that matter
Room recovery starts with defensible inputs. Fixed operating costs cover payroll, utilities, rent, licenses, and contracted services for the period you choose. Variable cost per occupied room-night should include housekeeping, linen, guest supplies, card fees, OTA commissions, and any per-stay items you allocate nightly. A one-time recovery amount can represent renovations, deferred maintenance, or a planned reserve contribution.
Translating budget into room-nights
The calculator converts rooms and days into available room-nights, then applies expected occupancy to estimate occupied room-nights. This step is critical because variable costs and add-on revenue scale with occupied nights. For example, 50 rooms across 30 days produce 1,500 available room-nights. At 65% occupancy, the model uses 975 occupied room-nights to spread costs and set required rate levels. Track closed rooms to keep the base accurate.
Profit target options for owners
Two profit methods are provided to match how stakeholders think about targets. Margin on revenue treats profit as a percentage of total revenue, so required revenue equals cost divided by one minus margin. Markup on cost applies profit on top of costs, so required revenue equals cost multiplied by one plus markup. Selecting the correct method prevents underpricing when targets are reported differently. Align it with your P&L format.
Add-on revenue and fee handling
Food, parking, spa, and upsell revenue can reduce the room revenue needed to recover the same cost base. Enter add-on revenue per occupied night when those earnings reliably track occupancy and not only events. Taxes and fees are handled as a percentage on the room rate to show net ADR and gross ADR. Use net ADR for internal yield work and gross ADR for guest-facing price displays. Keep channel commission outside tax fields to avoid double counting.
Using sensitivity to set rate fences
The sensitivity table shows how required ADR changes as occupancy shifts. Use it to create rate fences for low-demand periods and protect margins during peak weeks. If required ADR at 50% occupancy is above your market ceiling, focus on cost reductions, longer recovery periods, or bundled add-ons. If required ADR remains comfortably below competitors, you can invest in distribution, service upgrades, or strategic discounts.
FAQs
1) What does “required net ADR” represent?
It is the average nightly room rate before taxes and fees needed to cover the modeled costs and profit target, after subtracting add-on revenue tied to occupied nights.
2) Should I use margin or markup?
Use margin when owners define profit as a share of revenue. Use markup when targets are set as a percent added on top of costs. Choose the method used in your monthly reporting.
3) How do taxes and fees affect the final rate?
The calculator converts net ADR into gross ADR by applying the taxes/fees percentage. Use gross ADR when you must publish all-in pricing to guests and channels.
4) Why does higher occupancy sometimes lower required ADR?
Fixed costs are spread across more occupied room-nights. Even though variable costs rise with occupancy, the fixed portion per night falls, which often reduces the average rate needed.
5) What if my planned ADR shows occupancy over 100%?
That indicates the plan cannot recover costs at that price. Raise ADR, reduce costs, increase add-on revenue, extend the recovery horizon, or revise occupancy assumptions.
6) How often should I update the inputs?
Update monthly for stable operations, or weekly during high season and events. Refresh variable cost and commission assumptions whenever distribution mix changes meaningfully.