What occupancy do you need to break even on a short-term rental?

Oikos Property Ventures · ~6 min read

Your breakeven occupancy is the floor — the percentage of nights you must book just to cover costs. Below it you lose money every month. Knowing it tells you how much margin of safety a property really has.

The two kinds of cost

Breakeven math only works if you split your costs correctly.

• Fixed costs are owed whether or not anyone books: mortgage, insurance, property taxes, base utilities, and software subscriptions.
• Variable costs happen per booked night or per stay: cleaning, consumables, and percentage-based platform fees.

Get this split wrong and your breakeven will be wrong. A common mistake is dumping cleaning into fixed costs — it isn't fixed; you only pay it when a guest books.

Contribution per night

The key number is contribution per night:

Contribution per night = ADR − variable cost per occupied night

This is what each booked night contributes toward covering your fixed costs. If your nightly rate is $200 and the variable cost of hosting one more night is $45, each booked night contributes $155. If contribution is zero or negative, no level of occupancy will ever break even — you'd lose money on every booking.

The breakeven formula

Breakeven nights = fixed monthly costs ÷ contribution per night
Breakeven occupancy = breakeven nights ÷ nights in the month

So if your fixed costs are $3,750 a month and each night contributes $155, you need about 24.2 booked nights — roughly 81% occupancy in a 30-day month — just to break even. That's a tight property with very little room for a slow season.

Breakeven is the floor, not the target

Breakeven occupancy is not a goal — it's a warning line. A healthy target sits comfortably above it so you can absorb seasonality, surprise repairs, and a soft month without going negative. A useful rule of thumb:

• Breakeven below ~50%: a lot of cushion — even a weak season stays profitable.
• Breakeven around 55–65%: workable, but watch your slow months closely.
• Breakeven above ~65–70%: thin margin of safety — you need strong, consistent demand, or you should raise ADR or cut fixed costs.

How to lower your breakeven

• Raise ADR through better photos, staging, and dynamic pricing — every dollar of rate flows straight into contribution.
• Cut fixed costs — refinance, right-size insurance, drop unused subscriptions.
• Reduce per-night variable cost — more efficient turnovers and smarter supply purchasing.
• Boost real occupancy — faster guest response times and strong reviews move you further above the line.

The bottom line

Calculate your breakeven occupancy before you buy and recheck it whenever costs change. If it's high, the deal has little margin — fix the inputs or walk. If it's comfortably low, you've got a property that can ride out a slow season without bleeding cash.