There is no universal “good” occupancy. The minimum profitable occupancy depends on your fixed costs, your net income per night, and your variable costs per stay. The useful metric is break-even occupancy: the percentage of available nights you need to sell to avoid losing money.
The formula
Break-even nights = Annual fixed costs ÷ Net contribution per night sold
Break-even occupancy = Break-even nights ÷ Available nights × 100
Complete example
| Data | Example |
|---|---|
| Annual fixed costs | €18,000 |
| Average ADR | €180 |
| Commissions and variable costs per night | €60 |
| Net contribution per night | €120 |
| Available nights | 365 |
Break-even nights = 18,000 / 120 = 150 nights.
Break-even occupancy = 150 / 365 = 41.1 %.
Why a 70% occupancy can be bad
If to reach 70% you have to lower prices significantly, take on more cleaning, increase discounts, or rely on an expensive channel, you may generate more revenue but earn less.
And why 45% can be excellent
A premium property with a high ADR and controlled costs can easily exceed its break-even point with moderate occupancy.
What to include in fixed costs
- insurance;
- licenses and recurring fees;
- software;
- internet;
- basic maintenance;
- structural costs;
- financing, if you are calculating owner cash flow.
What to subtract from income per night
- OTA commission;
- payment costs;
- unrecoverable cleaning;
- laundry and consumables;
- variable supply costs;
- variable management if charged on income.
Conduct a stress test
Calculate the break-even occupancy with three scenarios: normal ADR, ADR -10%, and ADR -20%. If a small price drop triggers your minimum occupancy, your model has little safety margin.
Don’t chase occupancy. Chase sufficient contribution to cover your costs.
The best occupancy is the one that exceeds your break-even point with enough margin and without destroying price.
Methodology
The formula uses break-even analysis and separates fixed costs from net contribution per night. The percentages in the example are Gatavia assumptions, not market averages.
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Do Gatavia Check and review income, costs, and margin with your figures.