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Help with Income & Expenses Estimate

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commander started this discussion 15 years 11 months ago

Hello,

I'm thinking of opening a hostel in Chicago. I've been doing research for about a month or so and anticipate several more months of work before I'd consider opening. I've put together a very preliminary income and expense estimate based on talking with a few hostel managers and investigating my local market:

Monthly Income & Expense Projection
Chicago Hostel

Income:
100 beds @ 60% occupancy @ $10 bed (100 *.6 *10 * 30 days)
=$18,000 Gross Monthly Income

Expenses:
$3500 Rent or Mortgage Payment
$2500 Manager's Salary
$5520 3 FTE (full time employee equivalents) @ $10 / hour
$1000 Electric Bill
$600 Gas Bill
$300 Cable TV / Internet Bill
$1000 Supplies
$500 Advertising
$500 Insurance
$500 Miscelaneous
=$15,920 Gross Monthly Expenses

= $2080 Net monthly profit

I've deliberately tried to be conservative. I expect year-round occupancy to average higher and I think I could get a higher rate than $10/bed. The rent and mortgage payment is accurate for ~5000 square foot (460 square meters) property in my desired area. The 3 FTE employees means any combination of employee hours that total 3 equivalent full time employees (could be 2 part time and 2 full time or whatever).

This is just a very initial estimate to get an idea as to whether I should proceed further. I am not including start-up costs, I am just for now interested to see if this is potentially viable on an ongoing basis once established.

What other expenses am I missing? Any other comments?

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Christopher

13 years

bump.

There is a lot of very good info in here. Curious whether Commander ever successfully set up the hostel?

Also, it seems a lot of people assume break-even around 60% occupancy...However, according to industry standards (yes, they are only industry standards) the average hostel occ is approx 57-58% (this is from STAY/WYSE survey in 2010). Am I missing something?

From my early calculations, I would set break-even on a 48 bed hostel (location: small US city) at about 30% occ. 60% would equal a substantial profit in my estimation.

Anyone from a small/midsize US city; can you share thoughts on occupancy & break-even #'s?

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gordo

13 years

Hey Chris,

No I dont think you're missing anything - if the average is just short of 60% and most hostels run on the assumption of 60% occ break-even point then that would make perfect sense. Whenever you're planning, always assume things will be more expensive than you would normally assume (if that makes sense), first rule being: if it can break, it will. That said, take StayWYSE's numbers with a grain of salt - there are a lot of well established and profitable hostels that have nothing to do with StayWYSE (including most here, if I'm not mistaken).

Regarding your own numbers, without being able to see them myself its a little tough to make an informed comment - however, if you can find a way to break even at 30% occupancy then... well, you're doing pretty bloody well. I'm sure a few of us wouldnt mind (or am I speaking only for myself here?) going over them with you.

Out of curiosity (and as someone looking at a few locations in the US for my own purposes) which 'small US city' are you planning to open in?

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santa klaus

13 years

That said, take StayWYSE's numbers with a grain of salt - there are a lot of well established and profitable hostels that have nothing to do with StayWYSE (including most here, if I'm not mistaken).

Exactly. I duly filled in their endless questionnaire once and asked them to share their wisdom with me in return. They never bothered to send me anything although I asked several times. I won´t waste my time with them any more.

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Christopher

13 years

Gordo,

"In theory" I could break-even @ 30% occupancy ;) Literally, I've just sat down 2 weeks prior with the small business association to review my plan, etc.

So, it's early days for me and I'm hesitant to move forward with the project if 60% occ is only a break-even.

I've just found Klaus' excellent spreadsheet which I believe will help me immensely in putting together a more accurate projection.

We are looking at a small New England city located within spitting distance of 15+ National Parks, lots of skiing, water, etc. (am I being paranoid not saying;)

Maybe if we aren't shooting for the same city, we could help each other with plans/numbers?

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Faisal Kazi

10 years

Aboriginal Hostel wrote:

(price of appliances divided per days of warranty + expected price of electricity and water consumption per day + labor cost for handling laundry per day*+daily rental cost for the laundry space)/daily capacity of the laundry machine.

*=it means how much time you need to handle laundry per day. If its 6 loads and each load takes 10 minutes, that makes up an hour.

So lets check it out:

If you have a 500$ worth washing machine and a 500$ dryer, both has one year warranty, the laundry needs a space of 20m2 on 7,6$/m2 per month, it consumes 4kWh total with 70l of water (I just checked it's 1,72$ per thousand gallon, 70l is about 18 gallons) per load, takes an hour each for 10kg of clothes (or 22lb), and if 1 set is 1 kg, you have let's say 6 loads a day, then you get the following results:

(2.74+5$+2.58$+10$)/60sets=34c per set

@ aboriginalhostel, based on above calculations, can you pls advise what is the cost incurred for electricity & water consumed per load? (5$? or $2.58?)/ Would be grateful if you can you detail a bit how you arrived/calculated that result?

Thanks in advance

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Faisal Kazi

10 years

HI, can anyone be kind enough to please advise how does a washing machine consume 4kwh(!!) per wash (or is it per day?) as quoted in this thread, I have come across estimates of 0.5kwh per wash/load or even 0.1kwh per load. But 4kwh!? Even if it is per day, how does it explain to be this much? This is a HUGE variation in the numbers. Pls help.

Similiarly, for a refrigerator, I am getting huge variation in the numbers on the net; from 1.5kwh per day to 1.5 kwh (per hour)!

I know whats the calculation of watts to kwh to kwh per day/ But the problem is, the information here and on the Net is hugely variant and even conflicting.

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