Hotel break-even calculator
Enter your daily fixed costs and room price to see how many rooms you need to sell each night before the hotel makes any profit.
Break-even
3.4 rooms
4 booked rooms a night
Break-even occupancy
34%
Margin of safety
57%
Profit per day
$365
at expected sales
The formula
Break-even rooms = Fixed costs ÷ (ADR − Variable cost per room)
The part in brackets is the contribution of each room: what it adds towards paying the fixed costs. Every room sold above break-even turns its contribution into profit.
Example
A small hotel has $275 of fixed costs a day and sells rooms at $80. It needs $275 ÷ $80 = 3.4 rooms, so 4 booked rooms every night. With 10 rooms and 8 usually booked, its margin of safety is (8 − 3.4) ÷ 8 = 57%, and it earns 8 × $80 − $275 = $365 a day.
How to lower your break-even
- Raise ADR, if demand allows it (see price elasticity).
- Cut variable costs per room, for example direct bookings instead of high commissions.
- Reduce fixed costs carefully — cutting the staff that guests rely on can lose more revenue than it saves.
Practise it in a free hotel game
Run your own hotel in PlayLobbyboss and watch these numbers change with every price, room and hire you choose.
Play free — no downloadFAQ
- What counts as a fixed cost for a hotel?
- Costs you pay whether rooms are sold or not: salaried staff, building upkeep, insurance, property tax, loan repayments and software subscriptions.
- What is a variable cost per room?
- What each sold room costs you on top: cleaning supplies, laundry, amenities, booking commission. Leave it at 0 if you don’t know it yet.
- What is a healthy margin of safety?
- The higher the better. A hotel that breaks even at 40% occupancy can survive a quiet season far more easily than one that needs 85%.