Hotel Break-Even Occupancy Calculator
Break-even occupancy = fixed costs ÷ (contribution × rooms × 365)
Enter your numbers.
TL;DR Break-even occupancy = fixed costs ÷ ((ADR − variable cost per room) × rooms × 365) Select-service hotels typically break even around 55% to 70% occupancy. A 100-room hotel at a $140 ADR with $2.6M of fixed costs breaks even near 70%.
Break-even occupancy
69.84%
Break-even room nights / year
25,490
A break-even above 100% means fixed costs exceed what the hotel can earn at full occupancy; the cost structure or ADR must change.
The formula
Break-even occupancy = fixed costs ÷ ((ADR − variable cost) × rooms × 365) × 100
Worked example
A 100-room hotel runs a $140 ADR, carries $2,600,000 of annual fixed costs, and spends $38 per occupied room. Contribution per occupied room night = $140 − $38 = $102. Break-even room nights = $2,600,000 ÷ $102 = 25,490. Against 36,500 available room nights, break-even occupancy = 69.84%.
Typical cost structure by segment (indicative, as of Q3 2026)
| Segment | Variable cost per occupied room | Typical break-even occupancy |
|---|---|---|
| Economy | $25 – $35 | 50% – 60% |
| Select-service | $35 – $50 | 55% – 70% |
| Full-service | $60 – $90 | 60% – 75% |
Ranges are indicative national figures and vary by market, brand, and cost structure. For preliminary planning only; not an offer of credit.
Frequently asked questions
What counts as fixed vs variable hotel costs?
Fixed costs run whether rooms sell or not: property taxes, insurance, debt service, base payroll, franchise minimums, and utilities baseline. Variable costs scale with occupied rooms: housekeeping labor, laundry, amenities, OTA commissions, and the incremental utility load. Many line items are semi-variable, so split them honestly.
What is a good break-even occupancy for a hotel?
Lower is safer. Select-service hotels typically break even around 55% to 70% occupancy; economy properties can be as low as 50% and full-service as high as 75%. A break-even well below your market's actual occupancy means the property can absorb a downturn and still cover its costs.
How does ADR affect break-even occupancy?
Higher ADR raises the contribution each occupied room makes toward fixed costs, so break-even occupancy falls. In the worked example, raising ADR from $140 to $155 lifts contribution from $102 to $117 per room night and drops break-even occupancy from about 70% to about 61%.
How can a hotel lower its break-even occupancy?
Three levers: cut fixed costs (refinance debt service, contest property taxes, rebid insurance), raise ADR through revenue management or repositioning, and reduce variable cost per occupied room (housekeeping scheduling, direct booking to cut OTA commissions). Each moves the formula directly.