Rent and Staff Costs vs Revenue

An interesting question came up outside the forum, and I wanted to share it here because it’s valuable information.

Thanks to Lyuba from Soul Kitchen Hostel, Stefan from Hostel Ruthensteiner, Nuno from HUB hostels, and David from Hostel Ka’beh for this info!

Lyuba:
What is an average (good) rent to revenue ratio for a hostel/hotel?

Stefan:
It depends on the product and the seasons. For a mountain cabin in Austria they say 8 x the rent = revenue. That is because revenue (only short seasons) is low and only few people working themselves there can live on it.
For Hotels it varies between 15 and 25%. Also depending on the product. The higher the bednight revenue the percentage can go up accordingly.
These numbers are mostly valid for taking over an existing Hotel/Hostel not renting empty space. For an empty space somewhere between 12-16% I guess? But of course this could be completely unrealistic - depending on location etc. - also these are Austrian figures.

Nuno:
Depends on seasonality but I would say 15% in a resort and 25% in a city center.

Lyuba:
And what is an average % for labor costs?

Stefan:
~40% ?

Nuno:
I don't know the salaries and productivity in that place but should be around 30/35% of sales. This number can goes high if you have little number of beds, reception 24 hours, internal cleaning,...

David:
Rule of thumb should be that rent should be paid with 5 days worth of revenue, max to be really worth it... 7 or more will be really hard to make $.
So, 15-20%.
Also, salaries should be a similar number... so 10-14 days worth of revenue (50%~) max should be rent and salaries.. the rest is for everything else (maintainer, profit, reinvestment, utilities, etc)

Does this sound about right for your hostel?