Room Rate Breakeven Calculator

Estimate the average room rate needed to cover fixed and variable hotel costs at an expected occupancy level.

Estimate a break-even room rate

Enter available inventory, occupancy, fixed cost and variable cost per occupied room for the period.

Rooms available per day

Days in period

Expected occupancy (%)

Fixed costs for period

Variable cost per occupied room

Target operating surplus

Expected occupied room nights—

Fixed cost per occupied room—

Required average room revenue—

Required room revenue—

How the calculation works

Expected occupied room nights = rooms × days × occupancy. Required average room revenue per occupied night = variable cost per occupied room + (fixed cost + target surplus) ÷ expected occupied room nights.

How to use the result

Use the result to understand how occupancy assumptions affect the rate needed to recover costs. Lower occupancy spreads the same fixed cost across fewer sold nights, increasing the required average rate.

Assumptions and limitations

This simplified model attributes all entered fixed cost to room revenue and does not net off food, events, spa or other departmental contribution. It also ignores taxes and channel acquisition costs unless included in variable or fixed costs.

Example

Scenario testing at 50%, 70% and 90% occupancy can show how strongly fixed-cost recovery depends on volume.

Frequently asked questions

Is this the same as ADR?

No. It estimates the average room revenue needed under your assumptions; actual ADR is the achieved rate on rooms sold.

Should OTA commission be in variable cost?

If commission varies with occupied/booked rooms, include an appropriate expected amount or model it separately.

Can I add a target profit?

Yes. The target operating surplus is added to fixed costs before calculating the required rate.

Does other hotel revenue reduce the required room rate?

It can economically, but this simplified model does not include non-room contribution unless you adjust the cost target yourself.