Break-even occupancy: how many nights your short-term rental needs each month
Every short-term rental has a minimum number of booked nights it must hit in a month just to cover its costs. That minimum is called the break-even point, and the ratio of those nights to the days in the month is your break-even occupancy. Knowing this number tells you, at a glance, whether a given month is profitable or not.
What break-even occupancy means
Your rental has two kinds of costs. Fixed costs are the amounts you pay every month no matter how many nights you book — things like mortgage or rent, insurance, and software subscriptions. Variable costs change with each booked night: cleaning, supplies, and platform fees tied to a stay.
Break-even occupancy is the percentage of nights in a month that must be booked so that your revenue from those nights covers both your fixed and variable costs, leaving zero profit or loss. Below that line you lose money; above it you earn a profit.
The formula in plain words
- Subtract your variable cost per night from your nightly rate. The result is the margin per night — what you keep from each booked night after covering the costs that come with that specific stay.
- Divide your total fixed monthly costs by the margin per night. That gives the exact number of nights needed to cover all fixed costs.
- Round up to the next whole night, because you cannot book a fraction of a night.
- Divide that number of nights by the days in the month. The result is your break-even occupancy as a percentage.
Example numbers
Suppose a host has these figures for a 30-day month:
| Item | Value |
|---|---|
| Fixed monthly costs | $2,100.00 |
| Average nightly rate | $140.00 |
| Variable cost per booked night | $28.00 |
| Margin per night ($140.00 − $28.00) | $112.00 |
| Exact break-even nights ($2,100.00 ÷ $112.00) | 18.75 nights |
| Break-even nights (rounded up) | 19 nights |
| Days in the month | 30 |
| Break-even occupancy (19 ÷ 30) | 63.3% |
So this host must book at least 19 of the 30 nights to break even.
What if the month does better?
If the same host books 22 nights in that month:
| Item | Value |
|---|---|
| Nights booked | 22 |
| Net profit (22 × $112.00 − $2,100.00) | $364.00 |
| Occupancy (22 ÷ 30) | 73.3% |
Three nights above break-even turn a flat month into a profitable one.
What moves the number
Several levers change your break-even occupancy, and they all work in intuitive directions:
- A higher nightly rate increases the margin per night, so fewer nights are needed to cover the same fixed costs. Even a modest rate increase can shave a night or two off the requirement.
- Lower variable costs per night also raise the margin. Negotiating a cheaper cleaning service, buying supplies in bulk, or switching to a platform with lower per-booking fees all help.
- Lower fixed costs reduce the numerator of the division. Refinancing a mortgage, downgrading a software plan, or consolidating insurance policies each bring the break-even line down.
None of these levers changes the math; they change the inputs. The formula stays the same.
Why to check it month by month
Seasons matter. A summer month in a tourist town might carry 30 days of high demand, while a January month in the same location could see half that. Your nightly rate may dip in shoulder seasons, and your cleaning costs can rise if turnover is higher. Because both the rate and the variable cost per night shift with the season, the break-even occupancy you calculated for July does not apply to February.
Recomputing the number at the start of each month — or whenever a major cost changes — keeps you from flying blind. If your projected bookings for the coming month sit below your updated break-even occupancy, you have time to adjust: offer a mid-week discount, pause a non-essential subscription, or hold off on a planned repair until a busier period.
A note on scope
This is general bookkeeping math, not tax or financial advice.
The STR Host Profit Tracker does this arithmetic for one short-term rental: enter your own numbers and it shows annual net income, cash-on-cash return and cap rate.