Skip to content
Search

Latest Stories

Hotstats: Hotels must find a break-even point during pandemic

A certain level of occupancy is needed for a property to operate at neither a loss nor a gain

THERE’S A QUESTION hoteliers in the current economic climate have to ask themselves, according to a blog article from Hotstats: How low can you go? It’s a matter of balancing the cost of operating, or not operating, versus the revenue they stand to make to determine the break-even point.

The way to find that balance is a specific analysis, according to the article by David Eisen, Hotstats’ director of hotel intelligence and customer solutions, and Laura Resco, sales and account coordinator. The idea is that even a closed hotel incurs cost in terms of debt service, property taxes, utilities and even some labor costs. A break-even analysis determines the level of occupancy required for a property to operate at neither a loss nor gain.


The Hotstats article includes an interview with Imesh Vaidya, CEO of Premier Hospitality in Albuquerque, New Mexico. Premier Hospitality recently added a SpringHill Suites by Marriott in Durango, Colorado, to its portfolio of nine select-service hotels.

The company opened the new hotel at the end of April to reduce its losses from $6,000 per day or $5,800 per day, Vaidya is quoted as saying. The break-even analysis was a deciding factor in Premier’s decision to buy the property.

“It helps determine how we staff, our purchasing decisions—it's used for all aspects of the property," Vaidya said.

While hotels responded to previous downturns by lowering rates, Vaidya said that stimulating demand is not his concern even after travel restrictions are eased. He is more concerned with the costs associated with the extra cleaning that will be required when guests start coming again.

"Payroll will increase for extra time spent on rooms and public spaces and paying someone to wipe elevators and the pool down," he said.

For example, lobby areas in the new SpringHill are wiped down on the hour and cleaning rooms takes an extra 10 minutes each.

"That's an extra 10 minutes per room not budgeted for," Vaidya said, "Cleaning supplies are adding $1,200 in cost per month."

The break-even point in occupancy varies according to chain-scale segment, Eisen and Resco wrote, with a higher occupancy rate needed at lower levels on the scale. In the U.S., for example, the break-even rate for luxury hotels is 34.4 percent while select-service hotels, such as Vaidya’s, require 39.4 percent occupancy.

“The explanation for that tendency rests in the variance between asset classes,” the article said. “The break-even occupancy for the total U.S. to achieve a zero gain or loss in profit is 37.3 percent. The model is further refined by calculating the break-even point for each asset class separately, as a way of minimizing the average room rate variance of the total sample.”

In the end, Eisen and Resco conclude that the pandemic will permanently alter the hotel industry.

“After years and quarters of positive profit gain for hotels, COVID-19 has forced hoteliers to think differently and consider break-even modeling,” the article said. “Running a hotel that loses money is not a viable business model and with occupancy globally taking a hit, it is incumbent on hoteliers to consider what occupancy rate will allow a hotel to sustain operations. The sooner the better and with the hope that the break-even occupancy rate is only a short-term necessity.”

In April, Hotstats reported that in March hotels in the U.S. saw profits drop more than 100 percent from the previous year.

More for you

AAHOALending.com લોન્ચ 2025

AAHOA, બ્રિજ AAHOALending.com લોન્ચ કરે છે

AAHOA અને બ્રિજે AAHOALending.com ને AAHOACON 2025 માં રજૂ કર્યું

AAHOA અને બ્રિજે AAHOALending.com લોન્ચ કર્યું, જે હોસ્પિટાલિટી પર કેન્દ્રિત ડિજિટલ ધિરાણ પ્લેટફોર્મ છે. તે AAHOA સભ્યોને 150 થી વધુ ધિરાણકર્તાઓની ઍક્સેસ પ્રદાન કરે છે, જેમાં વધુને વધુ લોકોને નિયમિતપણે ઉમેરવાની યોજના છે, આ પ્લેટફોર્મ વપરાશકર્તાઓને ધિરાણ વિકલ્પોની તુલના કરવાની, શ્રેષ્ઠ દરો અને સુરક્ષિત ભંડોળ શોધવાની મંજૂરી આપે છે.

કોફાઉન્ડર અને CEO રોહિત માથુરની આગેવાની હેઠળના બ્રિજને ક્લબ બ્લુ ઇન્ડસ્ટ્રી પાર્ટનર તરીકે નિયુક્ત કરવામાં આવ્યા છે, જે AAHOAના પ્રોગ્રામમાં સર્વોચ્ચ સ્તર છે, તેના 300 ભાગીદારોમાંથી માત્ર 12 જ લાયકાત ધરાવે છે, એમ બંનેએ સંયુક્ત નિવેદનમાં જણાવ્યું હતું.

Keep ReadingShow less
2025માં મંદીની સંભાવના 50 ટકા : HAMA સર્વે

2025માં મંદીની સંભાવના 50 ટકા : HAMA સર્વે

HAMA 2025 સર્વે: 49% મેનેજર્સ મંદીની આશંકા ધરાવે છે

હોસ્પિટાલિટી એસેટ મેનેજર્સ એસોસિએશનના સ્પ્રિંગ 2025 ઇન્ડસ્ટ્રી આઉટલુક સર્વેક્ષણમાં અંદાજે 49 ટકા ઉત્તરદાતાઓ 2025 માં અમેરિકામાં મંદીની અપેક્ષા રાખે છે, જે 2024ના પાનખર સર્વેક્ષણમાં 19 ટકાથી વધુ છે. ટોચની ત્રણ ચિંતાઓ માંગ, ટેરિફ અને DOGE કટ અને વેતનમાં વધારો વચ્ચેનો જોડાણ છે.

HAMA સર્વેક્ષણમાં જાણવા મળ્યું છે કે લગભગ 55 ટકા ઉત્તરદાતાઓએ તેમની વર્તમાન વ્યૂહરચનાના ભાગ રૂપે બ્રાન્ડ અથવા મેનેજમેન્ટ ફેરફારો કર્યા છે અથવા કરવાની યોજના બનાવી છે.

Keep ReadingShow less
HWIC WHLA partnership 2025

HWIC joins WHLA to support industry women

HWIC Becomes WHLA’s 34th Member in 2025

THE HOSPITALITY WOMEN’S Innovation Council recently joined as the 34th member of the Women in Hospitality Leadership Alliance to support women and underserved communities across the industry. The council will encourage women to take part in the messaging, programs and initiatives shared by all WHLA groups.

WHLA was founded in 2021 as a consortium of organizations working to advance women in hospitality.

Keep ReadingShow less
CJ Media WHLA media training event for women in 2025

CJ Media, WHLA launch media training for women in hospitality

CJ Media & WHLA Empower Women with Media Training in 2025

CJ MEDIA SOLUTIONS LLC and the Women in Hospitality Leadership Alliance will provide quarterly media training to help advance women in hospitality. The program, offered to the alliance’s participating organizations, will draw on experienced media and PR professionals to deliver guidance across interviews, video, podcasts and live panels.

Each session will be archived for alliance members to access anytime, the duo said in a statement.

Keep ReadingShow less