15 years
26.3% is perfectly reasonable, but isn´t there a sales tax? That would reduce your monthly revenue.
how much to spend on rent/location relative to income
Travel Talk
Hi Everyone,
I've been working on a business plan for a new hostel in Tampa. I have my locations narrowed down and a business plan in the works. Aside from employee expenses, rent is obviously a huge part of the monthly expense.
My question is, is there a good 'rule of thumb' that rent shouldn't be more than X% of your gross monthly bed income. Here's my basic #'s:
5,500 square feet
$16 per sq. feet per year
monthly rent = $7333
with 5,500 sq feet, I'm estimating 62 beds (approx 90 sq/ft per bed)
i'm estimating $25/night average (too high, too low? one other hostel in town, but it cater's a different crowd i think)
max monthly income = $46,500
That's a 15.8% ratio using the max monthly gross income
Assuming an average of 60% occupancy (in the long run):
Monthly Income: $27,900
This gives ratio of 26.3%
What does everyone think?
:)
- Comments
15 years
Here in the US, the convention is for sales tax is in addition to the quoted price. The hotel tax in my area is 12%, so if my rate was $25, the guest would actually pay $28.41. This would yield the same numbers in my last post.
However, let's assume (just to be cautious) that $25 is what the guest pays, so I am left with $22 net. This gives me:
62 beds * $22/day * 30 days per month * 60% Occupancy = $24,552
So that yields a ratio of 29.9%
Do you think thats too high? What would you say is the absolute maximum for that type of figure?
If you'd like to take a look at my financial projections, I'd be happy to send it to you.
Thanks!
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