Looking for a bed and breakfast business plan? You're in the right place.
Before a lender or co-investor puts money into an inn, they want to know what the house costs to buy and fix, how many nights a year it can actually fill, and how a January with almost no guests is paid for. This article answers those questions with a complete sample plan for a seven-room bed and breakfast on Tybee Island, Georgia. We work through the summary at a glance, the market, the staffing and, most of all, the five-year numbers, so you can see what a finished plan looks like before you write your own.
What you will be able to do after reading it:
- Frame the summary at a glance: see how one house, one loan and one seasonal calendar fit on a single page
- Test the market: learn how to describe a beach town's visitor year, including the winter, without overstating demand
- Price the rooms: match a rate card and occupancy to weekends, weekdays and each month, rather than one average
- Budget the renovation: find out how much cash a historic house needs before the first guest, and how much reserve a storm-exposed property should hold
- Read the cash: follow how a mortgage, an owner's salary and a seven-month season appear in the profit, cash and balance sheet
- Plan for a bad summer: see the 20% shortfall case and the owner's response to it, so a bad season is planned for, not guessed at
This sample house is fictional. Its structure and figures show what a finished plan holds, and a plan for a real property needs its own quotes, appraisal and market data.
In this plan
If you need a bed and breakfast business plan template for your own plan, start it in the Toolkit.
The Coach House at a Glance
The Coach House is a seven-room bed and breakfast in a 1920s house and carriage house on Tybee Island, Georgia. It opens on June 1, 2027, after five months of renovation. Claire Whitfield buys the property, runs it and lives in an apartment on the ground floor. She owns 76% of the company and two private investors own 24%.
The project needs $1,180,000. Equity is $790,000 and a $390,000 mortgage covers the rest. The money buys a $520,000 property, $460,000 of renovation, furnishings and kitchen equipment, $60,000 of closing, permit and launch costs and a $140,000 cash reserve.
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Revenue | $193,492 | $416,446 | $477,501 |
| Net income after start-up costs | ($171,037) | $27,181 | $58,204 |
| Closing cash | $49,196 | $95,784 | $155,104 |
Year 1 holds seven trading months after a five-month renovation, and it loses money. The calendar does the rest. A Saturday night in July is priced at about $340 and a Tuesday in January at $168, and the plan staffs and funds for both. Year 2 is the first profitable year, and a thin one; by Year 3 the house earns about 24% before interest, depreciation and tax, and the mortgage is covered 3.4 times.
The plan also tests itself. If bookings run 20% short in every year, Claire takes a smaller salary, marketing and repairs are trimmed and distributions wait for the cash. The house still ends every year with cash in the bank, below the base case, but it loses money in Years 1 and 2. The base case also depends on volume and on events: a revenue shortfall of about 15% with no owner response removes Year 3 profit, and without events Year 3 profit is about 78% lower, at about $12,800 with the direct-cost mix row kept.
The Coach House sells one thing: a quiet night in a restored house, with breakfast, a short walk from the beach, run by the person who owns it.
What The Coach House Is
Legal name: The Coach House Tybee, LLC, a Georgia limited liability company. Owners: Claire Whitfield, 76%, and two private investors, 24%. Property: a 1920s main house and carriage house on Tybee Island. Six guest rooms in the main house, one of them new, one suite in the carriage house and an owner's apartment. Stage: pre-opening. The $520,000 price is a planning figure; the full statement is in the financing section. The offer is made subject to inspection, the appraisal and confirmation that the property may operate as a bed and breakfast with seven rooms.
Buying, not leasing
The plan buys the house with a 25-year mortgage and equity. A long lease was considered and set aside, because a landlord would keep the value that a renovation adds and a lender is unlikely to finance fixtures in a building the operator does not own. Buying exposes the plan to interest rates and insurance costs, and the tables show both.
Why seven rooms
Seven rooms is the most one owner can serve with a small part-time team (a lead and a weekend housekeeper, a breakfast cook, a relief innkeeper and a summer housekeeper) and still know every guest by name. Five of the main-house rooms were already rooms, and the sixth is the converted sitting room on the ground floor, which costs $45,000 to create. The carriage house suite is the seventh.
At these rates one room sells about $55,000 of room revenue a year by Year 3, so the conversion is worth its cost. The carriage house suite sells on its own as the quietest room, with a private entrance, at the top of the rate card.
Targets for 2027 to 2029
- Open on June 1, 2027 with all seven rooms ready and the house inspected.
- Reach 1,407 sold room-nights, 55.1% occupancy, in Year 3.
- Move direct bookings from 60% of room revenue in Year 1 to 68% in Year 3.
- Hold 20 small private events in Year 3, on weekdays and in shoulder months, at about $3,230 each, because the $3,000 price rises with the rate card from Year 2.
- Rebuild closing cash above the $140,000 reserve by Year 3, which closes at $155,104, and then pay the first distribution, $20,000.
Where the money comes from
| Line | How it is priced | Year 1 share of revenue |
|---|---|---|
| Direct bookings | Nightly rate with breakfast, on the house's own page, by phone and from repeat guests | 53% |
| Platform bookings | The same rate card, on Airbnb, Booking.com and similar sites | 35% |
| Add-ons and occasion packages | $13.50 per occupied night; $120 packages on 6% of nights | 7% |
| Elopements and small private events | $3,000 for the space, a coordinator and a toast | 5% |
Confirmations before closing
Short-term lodging, zoning, food service and tax rules are set by the city, the county and the state, and they change. Before closing, Claire's attorney confirms in writing that the property's zoning and any local registration allow a bed and breakfast with seven rooms, that parking and occupancy limits fit, and that the event use is permitted.
Events are 13.5% of Year 3 revenue, so the event use carries real weight in the plan. If events are not permitted, the event line comes out of the model.
The plan stays profitable without events, but Year 3 profit is about 78% lower and the Year 4 and Year 5 distributions could not be paid from earnings. The attorney also lists the registrations, inspections and lodging-tax filings the house needs. If the bed and breakfast use itself fails, the offer lapses and the deposit is returned.
Tybee Island's Visitor Year
A beach town with a short season and a long weekend
Tybee Island is the beach community east of Savannah. The plan's view of the island comes from the owner's own visits and not from a visitor survey. The beach, the pier and the lighthouse draw day visitors and weekend guests. Summer is the peak and spring and early fall hold strong weekends, while winter is quiet outside holiday weeks.
The model builds that shape into the Year 1 months and into each later year's occupancy, and treats Friday and Saturday nights separately, because they sell differently.
Rates and occupancy are the owner's own estimates
No published average rate or occupancy for small independent inns on Tybee Island is cited here. The rate card and the occupancy table are the first numbers to test against live listings for comparable rooms. The financial section measures the risk.
Where else a guest could stay
| Alternative | What it offers | Why a guest picks it | How The Coach House differs |
|---|---|---|---|
| Vacation rental homes and condos | Whole-unit stays for families and groups | Space, a kitchen and a lower cost per person | A hosted stay with breakfast and a person on site |
| Other inns and bed and breakfasts | Hosted rooms and breakfast | Established reviews and repeat guests | Seven rooms in a renovated house, each with a private bath |
| Hotels and motels on the island and off it | Predictable rooms and parking | Price and flexibility | Character, quiet and a fixed breakfast hour |
| Savannah hotels and inns | City stays within a short drive | Dining and sightseeing | Beach access without a drive at the end of the day |
The table describes what each alternative offers and how this house positions itself. It is not a ranking, and prices change often, so none are quoted here.
Strengths, weaknesses and the storm
| Strengths | Weaknesses |
|---|---|
| Owner lives on site and runs the front desk most days, with a relief innkeeper for days off | One owner: a missed shift stops the house |
| Seven rooms, each with a private bath, in a restored house | Winter occupancy under 45% in January, February, November and December |
| Heavy weekend demand priced at a premium | Insurance and repair costs on an older coastal house |
| Opportunities | Threats |
|---|---|
| Repeat guests and referrals from a small, loyal base | A named storm that closes the island or damages the house |
| Direct bookings that avoid platform commission | Rule changes on short-term lodging, occupancy or events |
| Weekday gatherings from guests who want a small private event | New rooms and rentals competing on price in summer |
Who Books the Coach House
Couples on a weekend away
Couples from Savannah, Atlanta and the Southeast who want two nights by the water. They book three to eight weeks ahead, ask about the carriage house suite and take the evening wine hour. They carry most of the Friday and Saturday demand.
Friends and family groups
Four to twelve people sharing the house for a long weekend: a bridal party, a family reunion, a birthday. They fill several rooms at once and book the carriage house first. Their demand is the main reason the weekend premium is 22% and not less.
Midweek visitors and small events
Retired couples, guests in Savannah for a wedding or a conference, and a few remote workers book weekdays at the lower rate and stay two or three nights. A smaller group comes for an elopement or a gathering of up to 20 people on a weekday or in a shoulder month, and takes rooms for the night before and after.
What arriving guests expect
A clean room, a quiet night and a hot breakfast. Easy parking. A host who knows the island and answers within the hour. Rooms that look like the photographs.
From a platform to the house's own page
The plan expects guests who find the house on Airbnb or Booking.com to rebook through its own page, where the rate is the same, breakfast is included and a late check-out is offered. The model moves platform bookings from 40% to 28% of room revenue over five years on that expectation.
Setting the Rate Card and Filling the Calendar
Occupancy by month
Weekend nights and weekday nights are set separately. The table shows a mature year, which is the level the model reaches by Year 3. The curve sits in the mid-50s.
| Month | Weekend nights | Weekday nights | All nights |
|---|---|---|---|
| January | 55% | 24% | 34% |
| February | 63% | 29% | 39% |
| March | 72% | 42% | 50% |
| April | 79% | 53% | 61% |
| May | 81% | 59% | 65% |
| June | 83% | 70% | 73% |
| July | 83% | 74% | 77% |
| August | 79% | 63% | 67% |
| September | 77% | 46% | 54% |
| October | 81% | 50% | 60% |
| November | 64% | 30% | 39% |
| December | 63% | 30% | 40% |
Across a mature year weekend nights are 73% full and weekday nights 48%, which is 55.1% overall. Friday and Saturday account for 38% of room-nights sold.
The rate card
Rates include breakfast and are the Year 1 figures. Friday and Saturday carry a 22% premium over the weekday rate.
| Season | Weekday night | Friday or Saturday night |
|---|---|---|
| January to February | $168 to $173 | $205 to $211 |
| March to May | $206 to $245 | $252 to $299 |
| June to August | $264 to $278 | $322 to $340 |
| September to October | $230 to $235 | $281 to $287 |
| November to December | $187 to $197 | $228 to $240 |
The blended rate is $261 in Year 1 and $289 by Year 5. Summer weekends carry a two-night minimum.
How a stay is booked
A guest finds the house on a platform, a search page or through a friend. The booking page shows the same rate on every channel. Direct guests get a free late check-out and, on a second stay, a bottle of local wine. The average stay is 2.1 nights, worth about $550 at the Year 1 rate.
The opening-year build
June starts at 60% of the mature level and builds each month to 92% by December as reviews come in. Over the seven trading months the house sells 656 room-nights, 44% of the nights it is open and 26% of the calendar year.
Five years of nights and rates
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Room-nights sold | 656 | 1,336 | 1,407 | 1,449 | 1,477 |
| Occupancy (all 365 nights) | 26% | 52.3% | 55.1% | 56.7% | 57.8% |
| Blended nightly rate | $261 | $262 | $271 | $281 | $289 |
| Platform share of room revenue | 40% | 36% | 32% | 30% | 28% |
| Small private events | 3 | 12 | 20 | 22 | 24 |
Where the Marketing Money Goes
The first-year budget
The first-year budget is $27,000: $16,000 of launch spend, paid from the start-up funds, and $11,000 of running costs. That is 14% of Year 1 revenue, a high share because the year is short. By Year 3 the running budget is $10,500, about 2% of revenue, because repeat guests and referrals carry more of the bookings. About 2% of revenue is low for a house that depends on direct bookings, so the marketing line is one to test, and each extra $5,000 a year lowers pre-tax profit by $5,000.
Direct bookings are about 187 stays in Year 1 at 2.1 nights each, which is about $144 of launch and running spend per direct stay. A platform stay of the same length costs about $82 in commission. In Year 3 about 455 direct stays on a $10,500 budget comes to about $23 each, against about $85 of commission on the same stay. Platforms fill the house in its first season, and the house's own page is how it stops paying them.
| Channel | Year 1 spend | What it is expected to do |
|---|---|---|
| Website and booking engine (launch) | $7,500 | A direct booking page with live availability, the rate card and a clear cancellation policy |
| Photography and video (launch) | $3,500 | Room, breakfast table, garden and carriage house images, also used on the platforms |
| Opening-season campaign (launch) | $5,000 | Introductions to Savannah wedding planners, officiants and tour operators, and a local press push |
| Search ads and local listing | $3,600 | Searches such as "bed and breakfast Tybee Island" and "Tybee Island inn" |
| Guest email and repeat offers | $1,200 | A short note after each stay and a spring and fall rebooking offer |
| Local partnerships | $1,500 | Gift certificates and referral arrangements with a florist, a bike rental and a restaurant |
| Content and social | $1,900 | Seasonal posts, a monthly guide to the island and photographs of guests' stays, with permission |
| Platform promotions | $1,000 | Visibility on the booking sites in the shoulder months |
| Direct-booking extras | $1,000 | The late check-out and wine for guests who book on the house's own page |
| Photography refresh | $800 | New images for winter and spring |
Dates that matter in 2027
- May 2027: inspections passed, seven rooms photographed and the booking page live.
- June 2027: first guest on June 1, with 92 room-nights sold in the month.
- July 2027: the peak room-revenue month, with 110 room-nights and $32,872 of room revenue.
- September and October 2027: the first three small events.
- December 2027: 656 room-nights for the year and the first set of reviews.
Running the House
The property and the five-month renovation
A 1920s main house and a carriage house on a lot a few blocks from the beach. The renovation runs for five months and costs $353,000 in total. The roof, porches, exterior paint and windows come first, and design review may apply if the property sits in a historic district ($62,000).
Six en-suite bathrooms in the main house cost $66,000, and the carriage house bath sits in the plumbing work. Heating and cooling, electrical and plumbing cost $78,000. Fire detection, egress, a kitchen upgrade and an accessible entrance cost $52,000. The converted sitting room, the sixth main-house room, costs $45,000.
The contingency is $50,000, about 16% of the hard costs. Structural work beyond these reserves, such as roof or HVAC replacement, is not in the plan, and a building survey before closing sizes it. A general contractor works to a written fixed-price scope, and an independent inspector signs off each stage before the first guest.
The contingency covers cost overrun, not the cost of carrying the house through a delay. About $39,100 of cash remains on June 1, after five months of carrying costs. Each extra month of work uses about $20,200 of it, so the plan tolerates a delay of about one month, and a two-month delay would leave almost nothing. A larger reserve or a bridge line from the lender is the remedy if the contractor's schedule is uncertain.
How a day runs
Breakfast is served from 7:30 to 10:00: a hot dish, baked goods, fruit and coffee, with dietary needs taken at booking. Claire cooks on weekdays, and the breakfast cook covers Friday to Sunday, when the house is fullest. Check-in is from 3:00 p.m., and rooms are cleaned between 10:30 and 3:00. The relief innkeeper covers evenings and Claire's days off.
Linen, housekeeping and supplies
Linens go to a commercial laundry, which is why laundry sits in direct costs. Housekeeping is covered by a part-time lead housekeeper, a weekend housekeeper and a seasonal housekeeper who works June to August. Toiletries come from a hospitality supplier, and breakfast goods from local bakers and growers where the price allows.
Weather and the island
Hurricane season runs June 1 to November 30. The house keeps a written storm plan, a cancellation policy that covers a mandatory evacuation and a list of repairs to make after a storm.
A named storm can close the island and shut the house for days. The named-storm deductible is commonly 1% to 5% of insured value on coastal property, and the broker confirms the percentage. On an illustrative insured value of $900,000 (a planning figure), that is $9,000 to $45,000. The $4,000 storm and closure reserve covers only the closure and repair costs below that deductible, and the insurance line of $28,000 stays light until a broker quotes.
Still to obtain before any offer
These items are not yet in hand. The buyer must still obtain each one before the plan is relied on:
- A commercial lender's written quote on the $390,000 mortgage, with its rate, term, loan-to-value limit and any balloon or rate reset.
- A Year 1 bridge: Year 1 cover is negative, so the buyer must still arrange an interest reserve, a bridge line or more equity that a lender accepts.
- A building survey before closing, which sizes the roof, HVAC and structural work that the plan does not carry.
- Proof of funds: documents for Claire's $600,000 from savings and the sale of her condominium, and a personal financial statement.
- Investor terms for the $190,000 of equity: any preferred return, buy-out right, distribution limit and voting rights. The buyer must still negotiate and sign them; none is agreed.
- An appraisal of the property and a broker's price opinion on the $520,000 price.
- The flood zone for the address from the FEMA flood map, and a flood-cover quote where the lender requires it.
- An insurance quote covering windstorm, liability, loss of income and cyber, and the named-storm deductible.
Booking and property software
A property management system with a channel manager keeps the calendar identical on every platform, and a booking engine runs the house's own page. Software costs $3,200 in Year 1.
Licenses, insurance and compliance
- A local business license and any short-term lodging registration the city requires. The attorney confirms both before closing.
- Collection and remittance of sales and local lodging taxes. Rates and filing rules differ by jurisdiction and change, so the plan names none.
- A Georgia alcohol license for wine sold on site, for the wine hour and the occasion packages, issued through the state and the city. The class, the fee and the local hours and zoning rules are confirmed with counsel before the first sale; the plan carries no figure for them.
- Food service rules for serving breakfast to guests. Whether a permit or inspection applies depends on the house and the county health department, and it is confirmed before opening.
- Fire, life-safety and accessibility inspections before the first guest. Accessibility obligations are confirmed with counsel.
- Insurance for the building with windstorm, flood cover, which a lender may require (the flood zone for the address is a to-do below), general liability, loss of income and cyber. Flood cover sits inside the insurance line and is not priced separately. It is set at $28,000 in Year 1 and is not a quote. The broker's quote for the actual policy replaces it before the lender relies on the model. Workers' compensation sits in payroll.
Laundry, trades and the people the house calls
A commercial laundry, a hospitality supplier, a general contractor, an HVAC and plumbing contractor, a pest-control service and a handyman on call. Each can be replaced, though a good tradesperson is hard to book in July.
Claire Whitfield and the Small Team
Claire Whitfield, owner and innkeeper
Claire Whitfield is a fictional owner created for this sample, and her background is illustrative. She has eleven years in hotel operations in Savannah, the last four as rooms division manager of a 90-room hotel, where she ran housekeeping, the front desk and a revenue plan. She holds a hospitality management degree. Her $600,000 comes from savings and the sale of a condominium, and she lives on site.
Where the team is thin
Claire has not renovated a building or owned a property, and she has not run a house with no one above her. The plan covers the first with a fixed-price contract and an independent inspector, the second with a lender-required appraisal and a property inspection before closing, and the third with a relief innkeeper hired before opening.
If Claire is out
The relief innkeeper and the lead housekeeper can run the house for a short period from a written operating manual, and the platform calendars can be closed. A longer absence would need a hired manager, which the cash flow could support for a season but not for a full year.
The investors
Two private investors hold 24% of the equity between them. The draft gives them no role in operations and proposes a quarterly summary and a yearly review. Distributions begin in Year 3 and grow only as the cash allows: $20,000 in Year 3, then $60,000 in Year 4 and $90,000 in Year 5. The plan does not model a sale of the house.
Over five years the base case earns $40,513 of net income and pays $170,000 of distributions, so $129,487 of the payouts is a return of capital, not profit.
Investor terms, including any preferred return, buy-out right or limit on distributions while Year 1 cover is negative, are proposed, not agreed; the buyer must still negotiate them, and the bank will ask for them.
Outside advisers and what they cover
A hospitality accountant on a retainer, a property attorney for the purchase and a licensed insurance broker for the first policy.
The equity split and the loan terms
Claire owns 76% of The Coach House Tybee, LLC and would typically be asked to give the bank a personal guarantee. The plan does not state her liquidity after the $600,000, and a lender would typically want a statement of it before the guarantee is signed.
The loan term, any balloon payment, the rate type and the covenants are set by the lender. This plan carries a 25-year full amortization at a 7.0% planning rate, with no balloon, as a modeling choice.
Commercial loans on owner-occupied hospitality property are often written with a shorter term, such as a 5 to 10 year balloon or a rate reset on a 25-year schedule. If so, the balance at that date, about $355,000 at the end of Year 5, would have to be refinanced or repaid. Each point on that rate changes Year 1 interest by about $3,900, and the model does not run a rate shock. A lender would typically take a first lien on the property and ask for annual financial statements and proof of property insurance.
Seven Rooms and Five Years: The Numbers
Five years sit in one model. January to December 2027 is shown month by month, the year the house is bought, rebuilt and opened. 2028 to 2031 are annual. Room-nights come first, because every revenue line is built from them.
From purchase to first guest
| Use of funds | Amount |
|---|---|
| Purchase of the 1920s house and carriage house, six guest rooms and an owner's apartment, Tybee Island | $520,000 |
| Renovation: roof repair, porches, exterior paint and windows (design review where the property is in a historic district) | $62,000 |
| Renovation: six en-suite bathrooms in the main house | $66,000 |
| Renovation: new heating and cooling, electrical and plumbing, including the carriage house bath | $78,000 |
| Renovation: fire detection, egress, kitchen upgrade and accessible entry | $52,000 |
| Renovation: contingency (about 16% of the hard costs) | $50,000 |
| Renovation: converted sitting room as a sixth main-house guest room (walls, floor and wiring) | $45,000 |
| Furniture, mattresses, linens, lighting and decor for seven rooms and the common rooms | $77,000 |
| Breakfast kitchen equipment, laundry-room and outdoor furniture | $30,000 |
| Legal, survey, inspection, title and loan closing costs | $34,000 |
| Permits, inspections and local business and lodging registrations | $10,000 |
| Launch: website and booking engine, photography, opening-season campaign | $16,000 |
| Cash reserve: carries the renovation months, the opening season and the first winter | $140,000 |
| Total uses | $1,180,000 |
| Source of funds | Amount |
|---|---|
| Claire Whitfield's savings and the sale of her Savannah condominium | $600,000 |
| Two private investors (minority equity) | $190,000 |
| Commercial mortgage (75% of purchase price, 25-year amortization; renovation funded by equity) | $390,000 |
| Total sources | $1,180,000 |
The project needs $1,180,000. Claire Whitfield puts in $600,000 from savings and the sale of her Savannah condominium, and two private investors put in $190,000. Equity is $790,000, or 67% of the total, split 76% to Claire and 24% to the investors.
The plan models a $390,000 mortgage on a 25-year term at a 7.0% planning rate, which is 33% of the total and 75% of the $520,000 purchase price. The monthly payment is about $2,760.
The plan's own limit is five times Year 3 EBITDA. Earnings means Year 3 EBITDA: net income plus interest, depreciation and income tax, which is $113,216 in Year 3. The cap would allow a $566,000 mortgage, but this plan keeps the loan at 75% of the price, so the mortgage is $390,000, or 3.4x Year 3 EBITDA.
Year-end debt is 3.3x Year 3 EBITDA ($370,776), 4.6x Year 2 EBITDA ($377,636 against $82,656) and 2.5x Year 5 EBITDA of $140,169 ($355,532). Equity is 67% of the funding because the loan is held to the price, not to the earnings cap.
The $520,000 purchase price is the owner's planning figure, not a market value, and it has not been tested against sales. Tybee prices vary by lot and condition. A broker's price opinion or an appraisal checks the figure before any offer, and this plan cites no comparable sales.
The loan is 75% of the lower of the price or the appraised value. A higher price would raise the equity need; a lower one would lower the loan. The renovation and furnishings are unchanged.
Lenders set their own rates and loan-to-value limits, so the rate and the split stand in until a lender quotes. A lender would typically ask for Claire's personal guarantee and a first lien on the house. The $353,000 renovation and the $107,000 of furniture and kitchen equipment come from equity, because the lender finances the building and not the work.
The $140,000 reserve is 12% of the funding, but it is not all there on opening day. The five renovation months carry about $101,000 of running costs and interest before the first guest, so cash falls from $119,800 at the end of January to $39,100 on 1 June, and the lowest month of Year 1 is June 2027, at about $35,800 after receivables. Cash is back above $140,000 only in Year 3, at $155,104. Year 2 is not modeled by month.
The $50,000 contingency covers cost overrun, not the cost of carrying the house through a delay. Each extra month of work uses about $20,200 of the $39,100, so the plan tolerates a delay of about one month. In an engine run with a two-month delay, revenue and part-time hiring both pushed back, the low point falls to about $2,600; with staff starting on schedule it goes below zero. A larger reserve or a bridge line from the lender is the remedy if the contractor's schedule is uncertain.
The purchase and the work are booked in January, and January to May is renovation, so those months carry running costs and no revenue. Each extra month of work adds about $17,400 of running cost plus the $2,760 mortgage payment. Sales and lodging taxes are collected from guests and paid over, so they sit outside revenue.
The inputs behind the forecast
- The house has seven guest rooms: six in the main building, one of them created by converting the former sitting room, and one suite in the carriage house. Claire's apartment is not sold. That is 2,555 room-nights a year. The 2027 calendar has 105 Friday and Saturday nights, priced at the weekend rate, and 260 weekday nights.
- Occupancy is set separately for weekend and weekday nights in each month. At maturity, weekend nights run from 55% in January to 83% in June and July, and weekday nights from 24% in January to 74% in July. No month goes above 83% on either.
- Friday and Saturday carry 38% of room-nights sold. The curve sits in the mid-50s, and winter months stay under 45%.
- The house opens on June 1, 2027, so Year 1 has seven trading months. Opening occupancy is a share of the mature level: 60% in June, rising to 92% in December. That is 656 room-nights in Year 1, 44% of the 1,498 the house can sell from June, and 26% of the calendar year. Years 2 to 5 run at 95%, 100%, 103% and 105% of the mature pattern, which is 52.3%, 55.1%, 56.7% and 57.8% of all nights, or 1,336, 1,407, 1,449 and 1,477 room-nights.
- Rates include breakfast. Weekday nights in Year 1 run from $168 in January to $278 in July, and Friday and Saturday carry a 22% premium. The blended rate is $261 in Year 1 and $262, $271, $281 and $289 in Years 2 to 5, after rate increases of 4%, 3.5%, 3.5% and 3%.
- Year 2's $262 is the first full-year blend and includes winter nights, which Year 1 does not, so the 4% increase applies to the rate card rather than to that blend. Revenue per available room over all 2,555 room-nights is $67 in Year 1 and $149 in Year 3 (room revenue only; total revenue is about $187 per available room-night in Year 3). Live listings for comparable rooms are the first check on the rate card.
- Airbnb, Booking.com and similar platforms take 40% of room revenue in Year 1, falling to 28% by Year 5 as repeat and referred guests book the house's own page. The platform commission is 15% of platform room revenue: $10,255 in Year 1 and $18,316 in Year 3. The 15% is a blended figure, and each platform publishes its own terms.
- Direct costs are priced by channel: 12.5% of direct room revenue, 9.5% plus the 15% commission on platform bookings, 38% on add-ons, 45% on occasion packages and 50% on events. At the Year 1 rate, the 12.5% is about $33 a room-night: breakfast food about $12, outsourced laundry and linen about $9, toiletries and amenities about $4, and card fees about $8. Platforms pay out after their own payment processing, and the platform line leaves card fees out.
- The forecast applies one blended rate, 20.4%, set by the Year 1 channel mix, to every year. The row labeled direct-cost mix adjustment adds the gap as events and platform bookings take a larger share: $4,127 in Year 2, $9,697 in Year 3 and $11,857 in Year 5. With that row, direct costs equal the channel rates in every year.
- Add-ons, an evening wine and cheese hour, picnic baskets, beach chairs and bicycles and a gift shelf, average $13.50 per occupied room-night in Year 1 and rise with the rate card from Year 2. Occasion packages of flowers, sparkling wine and an in-room dinner sell on 6% of occupied nights at $120. Elopements and small private events of up to 20 guests, held on weekdays and in shoulder months in the garden and on the porch, are priced at $3,000 for the space, a coordinator and a toast, with guest rooms billed separately. The plan books 3 events in Year 1, then 12, 20, 22 and 24, and prices rise with the rate card from Year 2.
- Events are 13.5% of Year 3 revenue, and they need a use permit that the attorney confirms before closing.
- Without events, Year 3 net income is about $12,800 with the direct-cost mix row kept, the test figure. With the row removed it is about $22,500, an upper bound. Year 5 net income is about $27,100 to $39,000 on the same two bases, and Year 5 cash stays positive, at about $22,400 and $58,800. The plan stays profitable without events, but Year 3 profit is about 78% lower, and the Year 4 and Year 5 distributions could not be paid from earnings: Year 5 cash stays positive only because $170,000 of distributions are paid from cash already built.
- Event demand is the least tested input. At half the events in every year, Year 3 net income is about $35,600 and Year 5 cash about $104,400. At a price 20% lower, Year 3 net income is about $49,200 and Year 5 cash about $145,500. At a price 20% higher, Year 3 net income is about $67,100 and Year 5 cash about $199,800.
- The average stay is 2.1 nights, so Year 3 has about 670 check-outs. A room turn takes about 1.1 hours, a stay-over about 0.4 hours, and the common rooms about an hour a day. That is about 1,400 housekeeping hours in Year 3. The housekeeping roles are scheduled for more than that, and the margin covers summer weekend turnovers, when two people work at once.
- Claire's salary is $48,000. She lives on site, so her apartment is part of her pay, and the salary sits inside every profit line. Payroll taxes, workers' compensation and paid leave add 27% to her wages, 15% to part-time wages and 12% to the seasonal role.
- Part-time pay runs at about $15 to $18.50 an hour for the hours each role is scheduled. Pay rises 3% a year from Year 2 and is shown on its own line.
- The house is owned, so rent is zero. Property tax is $10,500 in Year 1, and utilities are $18,500.
- Insurance is set at $28,000 in Year 1, rising 5% a year to $34,000 in Year 5. The broker's quote for the actual policy, covering windstorm, flood (which a lender will likely require, to be confirmed with a licensed insurance agent for the address), liability, loss of income and cyber, replaces that figure, and the model is re-run on it.
- A bill 50% higher would be $42,000 in Year 1 and $51,000 in Year 5, an increase of $14,000 and $17,000 on the base line. That takes Year 3 net income to about $43,000 and Year 5 cash to about $115,000, below the $140,000 reserve; the lender should see that case. Windstorm and flood pricing on a coastal house is the line most likely to move.
- The named-storm deductible is commonly 1% to 5% of insured value on coastal property, and the broker confirms the percentage. On an illustrative insured value of $900,000 (a planning figure), that is $9,000 to $45,000, against the $4,000 storm and closure reserve, which covers only the costs below the deductible.
- The $28,000 insurance line is light against that exposure until the broker quotes. Repairs start at $10,000 and rise to $18,000, and a furniture and linen reserve builds from $2,500 to $11,500 a year.
- Card and platform receipts settle in about 6 days. Suppliers are paid in about 20 days. Pantry, wine and linen stock is held at about 4% of direct costs.
- Licenses, registrations and lodging-tax filing cost $2,200 in Year 1. Rates and filing rules differ by jurisdiction and change, so the model carries the filing cost and no tax rate.
- Buildings are depreciated over 39 years on $224,000, the $520,000 price less a $296,000 land share. The renovation ($353,000) follows the building over 39 years, as nonresidential real property, which the federal tax code generally treats as a 39-year class, and furnishings ($77,000) and kitchen and outdoor equipment ($30,000) are depreciated over 7 and 10 years. An advisor sets the real land split and confirms whether any interior work qualifies for a shorter life.
- The model taxes the company at the entity level, as if The Coach House Tybee, LLC had elected corporate treatment. A multi-owner LLC is generally taxed as a partnership by default, in which case the profit is taxed to the owners and this line would be replaced; the model does not show that personal tax. The federal rate is 21%. The Georgia rate is set by the state and is not quoted here; the model carries a planning figure, with state tax deducted federally.
- An accountant confirms the entity choice and the Georgia rate before the first return.
- Losses carry forward and offset later taxable profit in full in the model, so income tax starts in Year 4 at $12,280 and is $21,843 in Year 5. Federal rules limit that offset to 80% of taxable income for losses after 2017. Applying the limit would add roughly $1,400 of tax in Year 2 and $3,000 in Year 3, and cut Year 4 tax by about $4,300; the five-year total is unchanged. These are estimates outside the engine, which does not apply the limit, and an accountant confirms the treatment.
- The $60,000 of start-up costs is charged to Year 1 profit and cash in full, and the tax calculation does not deduct it. That is a simplification. The $34,000 of purchase and loan closing costs would usually be capitalized to the property or the loan, which would lower Year 1 expense and the Year 1 loss; the plan keeps them expensed, the more cautious view of Year 1. An accountant confirms the treatment before the first return.
- Distributions of $20,000 in Year 3, $60,000 in Year 4 and $90,000 in Year 5 come out of cash the house has built. Year 5 exceeds that year's profit, at $90,000 against $64,341. Over five years net income totals $40,513 and distributions $170,000, so $129,487 of the payouts is a return of the owners' capital, and retained earnings end Year 5 at ($129,487). The Year 5 amount could rise to about $122,000 before cash reached the reserve.
Sales by channel
| Revenue stream | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Direct bookings (own website, phone, repeat guests) | $102,554 | $224,152 | $259,471 | $284,745 | $307,524 |
| Platform bookings (Airbnb, Booking.com and similar) | $68,369 | $126,086 | $122,104 | $122,033 | $119,593 |
| Add-ons: wine hour, picnic baskets, beach gear, gift shelf | $8,850 | $18,762 | $20,440 | $21,790 | $22,880 |
| Occasion packages (anniversaries, birthdays, proposals) | $4,719 | $10,006 | $10,902 | $11,622 | $12,203 |
| Elopements and small private events (up to 20 guests) | $9,000 | $37,440 | $64,584 | $73,529 | $82,620 |
| Total revenue | $193,492 | $416,446 | $477,501 | $513,719 | $544,820 |
| Growth on prior year | – | 115% | 15% | 8% | 6% |
Room revenue is 88% of Year 1 revenue and 80% of Year 3. Direct bookings are 53% of Year 1 revenue and 54% of Year 3, and platform bookings fall from 35% to 26%. Within room revenue, direct bookings rise from 60% to 68%. Events grow from 5% of revenue in Year 1 to 13.5% in Year 3 and 15% in Year 5, as the calendar fills with weekday elopements and small gatherings booked months ahead.
Add-ons and packages hold at about 7%. At Year 3 volumes, every ten points of room revenue that moves from a platform to the house's own page saves about $4,600 a year: a platform stay carries 24.5% in direct costs including commission, and a direct stay 12.5%. Year 2 grows 115% because Year 1 holds seven trading months at a build-up occupancy. The later 15%, 8% and 6% come from rate increases, a few points of occupancy and more events.
Month by month in 2027
| Month | Direct bookings (own website, phone, repeat guests) | Platform bookings (Airbnb, Booking.com and similar) | Add-ons: wine hour, picnic baskets, beach gear, gift shelf | Occasion packages (anniversaries, birthdays, proposals) | Elopements and small private events (up to 20 guests) | Total revenue | EBITDA |
|---|---|---|---|---|---|---|---|
| Jan 2027 | $0 | $0 | $0 | $0 | $0 | $0 | ($17,422) |
| Feb 2027 | $0 | $0 | $0 | $0 | $0 | $0 | ($17,422) |
| Mar 2027 | $0 | $0 | $0 | $0 | $0 | $0 | ($17,422) |
| Apr 2027 | $0 | $0 | $0 | $0 | $0 | $0 | ($17,422) |
| May 2027 | $0 | $0 | $0 | $0 | $0 | $0 | ($17,422) |
| Jun 2027 | $15,891 | $10,594 | $1,248 | $665 | $0 | $28,398 | $5,170 |
| Jul 2027 | $19,723 | $13,149 | $1,480 | $790 | $0 | $35,142 | $10,536 |
| Aug 2027 | $17,658 | $11,772 | $1,410 | $752 | $0 | $31,592 | $7,711 |
| Sep 2027 | $13,333 | $8,889 | $1,202 | $641 | $3,000 | $27,065 | $4,110 |
| Oct 2027 | $16,660 | $11,106 | $1,454 | $775 | $6,000 | $35,995 | $11,214 |
| Nov 2027 | $8,976 | $5,984 | $985 | $525 | $0 | $16,470 | ($4,319) |
| Dec 2027 | $10,313 | $6,875 | $1,071 | $571 | $0 | $18,830 | ($2,442) |
January to May carry no revenue. Each of those months loses about $17,400 at EBITDA, the profit before interest, depreciation and tax, because Claire's pay, insurance, utilities, property tax and software start before the first guest, and running costs are spread evenly across the year. That spread also charges January to April with part-time pay that does not start until May, so the June low is conservative by roughly $10,000 to $15,000.
Revenue starts at $28,398 in June, reaches $35,142 in July and falls to $16,470 in November. Room revenue peaks in July at $32,872. Total revenue peaks in October at $35,995, because of event bookings.
June to August bring $95,132, about half of Year 1 revenue, and the seven trading months average about $27,600 each. EBITDA is positive from June to October and negative in November and December.
The lowest month of Year 1 is June, at $35,841 after receivables; May closes at $39,107. The monthly cash view takes six days of receivables off monthly revenue, so December closes at about $48,000 on that view, while the year-end balance sheet, which uses annual revenue, shows $49,196. Years 2 to 5 are annual, so the first full winter is not shown month by month. The Year 2 result and the year-end balances are the checks on it.
Staffing and payroll
| Role | Annual wage | Starts | Year 1 end | Year 2 end | Year 3 end | Year 4 end | Year 5 end |
|---|---|---|---|---|---|---|---|
| Owner and innkeeper (lives on site) | $48,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Lead housekeeper (part time, about 22 hours a week) | $21,000 | Month 5 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Breakfast cook (part time, about 14 hours a week, Friday to Sunday) | $13,000 | Month 5 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Relief innkeeper (part time, about 15 hours a week, covers days off and evenings) | $14,000 | Month 5 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Weekend housekeeper (part time, about 9 hours a week, Friday to Sunday) | $8,000 | Month 6 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Summer housekeeper (seasonal, June to August) | $8,000 | Month 6 | – | – | – | – | – |
| Total payroll incl. on-costs | $105,367 | $127,600 | $127,600 | $127,600 | $127,600 |
Claire is on payroll from January, running the renovation and the opening. The lead housekeeper, the breakfast cook and the relief innkeeper start in May, so the house is staffed and trained before the first guest on June 1. The weekend housekeeper starts in June, and a seasonal housekeeper works June to August each year, shown at an annual-equivalent rate; it works about 10 hours a week at about $15 an hour for the three months, roughly $2,000 in total. Its quarter of a full-time equivalent is in the payroll line, and the staffing table shows no year-end count for it because it works only three months.
No midweek host is in the base case. The 20 events a year are run by Claire, the relief innkeeper and the weekend housekeeper, and a dedicated host would add about $18,000 a year. Part-time roles count as 0.5 of a full-time equivalent, a convention: their scheduled hours range from about 9 to 22 a week, so revenue per FTE is a rough measure.
Payroll including on-costs is $105,367 in Year 1, which is 54% of revenue because the year has seven trading months. In Year 3 it is $127,600 before pay rises and 28% of revenue with them. Claire's salary runs from month 1, so every profit line is what remains after she is paid.
Profit and loss
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $193,492 | $416,446 | $477,501 | $513,719 | $544,820 |
| Direct costs (breakfast food, laundry, amenities, card fees and platform commissions) | ($39,556) | ($85,135) | ($97,617) | ($105,021) | ($111,379) |
| Gross profit | $153,936 | $331,311 | $379,884 | $408,698 | $433,441 |
| Payroll incl. on-costs | ($105,367) | ($127,600) | ($127,600) | ($127,600) | ($127,600) |
| Rent | $0 | $0 | $0 | $0 | $0 |
| Utilities | ($18,500) | ($19,000) | ($19,600) | ($20,200) | ($20,800) |
| Marketing | ($11,000) | ($10,500) | ($10,500) | ($11,000) | ($11,500) |
| Insurance | ($28,000) | ($29,400) | ($30,900) | ($32,400) | ($34,000) |
| Professional fees | ($6,500) | ($6,000) | ($6,200) | ($6,400) | ($6,600) |
| Software subscriptions | ($3,200) | ($3,300) | ($3,400) | ($3,500) | ($3,600) |
| Property tax | ($10,500) | ($10,800) | ($11,100) | ($11,400) | ($11,700) |
| Repairs, grounds, pest and storm preparation | ($10,000) | ($12,000) | ($14,000) | ($16,000) | ($18,000) |
| Direct-cost mix adjustment: channel rates above the blended Year 1 rate (events and platform mix) | $0 | ($4,127) | ($9,697) | ($10,745) | ($11,857) |
| Furniture, mattress and linen replacement reserve | ($2,500) | ($5,500) | ($8,000) | ($10,000) | ($11,500) |
| Cleaning and housekeeping consumables | ($2,600) | ($4,200) | ($4,500) | ($4,700) | ($4,900) |
| Business licenses, lodging-tax filing and registrations | ($2,200) | ($2,300) | ($2,400) | ($2,500) | ($2,600) |
| Named-storm deductible reserve and closure allowance | ($4,000) | ($4,500) | ($5,000) | ($5,500) | ($6,000) |
| Phones, internet, postage and miscellaneous | ($3,200) | ($3,400) | ($3,500) | ($3,600) | ($3,700) |
| Bad debt, chargebacks and damage not covered | ($1,500) | ($2,200) | ($2,500) | ($2,700) | ($2,900) |
| Annual pay raises (3% a year) | $0 | ($3,828) | ($7,771) | ($11,832) | ($16,015) |
| EBITDA | ($55,131) | $82,656 | $113,216 | $128,621 | $140,169 |
| Depreciation | ($28,795) | ($28,795) | ($28,795) | ($28,795) | ($28,795) |
| Interest | ($27,111) | ($26,680) | ($26,217) | ($25,721) | ($25,190) |
| Income tax | $0 | $0 | $0 | ($12,280) | ($21,843) |
| Net income before start-up costs | ($111,037) | $27,181 | $58,204 | $61,824 | $64,341 |
| Start-up costs expensed at opening (legal and closing, permits, launch marketing) | ($60,000) | $0 | $0 | $0 | $0 |
| Net income after start-up costs | ($171,037) | $27,181 | $58,204 | $61,824 | $64,341 |
Year 1 loses $55,131 at EBITDA, and $111,037 after $28,795 of depreciation and $27,111 of interest. With the $60,000 of start-up costs the loss is $171,037. Year 2 is the first profit, at $27,181, because a full year of payroll and insurance lands before occupancy reaches its mature level, and interest is $26,680.
Net income is $58,204 in Year 3, $61,824 in Year 4 and $64,341 in Year 5, a net margin of 12.2% in Year 3 and 11.8% in Year 5. Income tax starts in Year 4, when the carried-forward losses run out.
EBITDA margin rises from 20% in Year 2 to 26% in Year 5. Depreciation and interest together take about $55,000 a year in Year 3. No published margins for independent inns are cited, so the margin is the owner's planning figure.
Where the cash goes
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Cash from operations | ($144,837) | $52,985 | $86,180 | $90,133 | $92,719 |
| Property, renovation and furnishings | ($980,000) | $0 | $0 | $0 | $0 |
| Funding received | $1,180,000 | $0 | $0 | $0 | $0 |
| Mortgage principal repaid | ($5,966) | ($6,398) | ($6,860) | ($7,356) | ($7,888) |
| Owner distributions | $0 | $0 | ($20,000) | ($60,000) | ($90,000) |
| Net change in cash | $49,196 | $46,588 | $59,320 | $22,777 | ($5,169) |
| Closing cash | $49,196 | $95,784 | $155,104 | $177,881 | $172,712 |
Closing cash is $49,196 at the end of Year 1, $95,784 in Year 2 and $155,104 in Year 3. It rises to $177,881 in Year 4 and then falls to $172,712 in Year 5, after distributions of $60,000 and $90,000. Year 5 closing cash is $32,712 above the $140,000 opening reserve.
Year 1 operations use $144,837, including the $60,000 of start-up costs and $27,111 of interest. Mortgage principal is $5,966 in Year 1 and $7,888 in Year 5, and the model does not prepay the mortgage.
The model runs cash by month only for Year 1, where the base case stays positive every month, with its lowest point in June at about $35,800. Years 2 to 5 are shown at year end, so the first winter is not shown month by month.
Year-end balance sheet
| At year end | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Cash | $49,196 | $95,784 | $155,104 | $177,881 | $172,712 |
| Accounts receivable | $3,181 | $6,846 | $7,849 | $8,445 | $8,956 |
| Pantry, wine and linen stock | $1,582 | $3,405 | $3,905 | $4,201 | $4,455 |
| Property, renovation and furnishings (net) | $951,205 | $922,410 | $893,615 | $864,821 | $836,026 |
| Total assets | $1,005,164 | $1,028,445 | $1,060,473 | $1,055,347 | $1,022,149 |
| Supplier balances owed | $2,167 | $4,665 | $5,349 | $5,755 | $6,103 |
| Mortgage | $384,034 | $377,636 | $370,776 | $363,420 | $355,532 |
| Paid-in capital | $790,000 | $790,000 | $790,000 | $790,000 | $790,000 |
| Retained earnings | ($171,037) | ($143,856) | ($105,652) | ($103,828) | ($129,487) |
| Total liabilities and equity | $1,005,164 | $1,028,445 | $1,060,473 | $1,055,347 | $1,022,149 |
Debt cover and the break-even line
| Measure | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| EBITDA margin | -28.5% | 19.9% | 23.7% | 25.0% | 25.7% |
| Net margin (before start-up costs) | -57.4% | 6.5% | 12.2% | 12.0% | 11.8% |
| Payroll incl. pay raises as share of revenue | 54% | 32% | 28% | 27% | 26% |
| Revenue per full-time equivalent at year end | $64,497 | $138,815 | $159,167 | $171,240 | $181,607 |
| Average monthly revenue | $16,124 | $34,704 | $39,792 | $42,810 | $45,402 |
| Monthly revenue needed to cover operating costs | $21,899 | $26,046 | $27,933 | $29,337 | $30,719 |
| Debt service cover (EBITDA / interest + principal) | -1.7x | 2.5x | 3.4x | 3.9x | 4.2x |
The last three rows of the ratios table give the test. Year 1 averages $16,124 of monthly revenue against $21,899 needed to cover operating costs, because five of its twelve months have no guests. Its seven trading months average about $27,600.
Year 3 averages $39,792 a month against $27,933 needed to cover operating costs, pay rises included, which is 42% above the line. Add the $2,760 monthly mortgage payment and the Year 3 need is about $30,700, so the house clears that line by about 30%.
The operating line includes the Year 3 direct-cost mix row, and the mortgage payment is added separately. Debt service cover, EBITDA over interest and principal, is negative in Year 1, 2.5x in Year 2 and 3.4x in Year 3.
Year 1 cover is -1.7x: the first year's earnings do not cover interest and principal, and the buyer must still arrange a bridge: the reserve and any lender bridge line would have to cover the gap, and neither is yet agreed. A lender sizing on a minimum cover ratio may decline the loan or ask for more equity. An SBA 7(a) loan is one route to test, on terms the lender and the SBA set.
Twenty percent fewer bookings, and the owner's response
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $154,794 | $333,157 | $382,001 | $410,975 | $435,856 |
| Net income before start-up costs | ($133,939) | ($14,159) | $10,282 | $22,498 | $31,486 |
| Net income after start-up costs | ($193,939) | ($14,159) | $10,282 | $22,498 | $31,486 |
| Closing cash | $26,813 | $32,659 | $64,221 | $107,769 | $144,828 |
This case takes 20% off every revenue line in every year, bookings and rates together. The owner reacts once the shortfall shows, after two trading months: from August 2027 Claire takes a 20% pay cut to $38,400. Relief and weekend housekeeping hours fall 15% with occupied nights from the start.
From Year 2, marketing is cut 20%, the furniture and linen reserve is halved, repairs are trimmed and utilities fall 5%; the Year 1 annual lines stay untrimmed, because the model spreads them evenly across the year. Platform commission falls with room revenue. Distributions are held to what the cash allows: none in Years 1 to 4 and $15,000 in Year 5, capped at that year's profit and kept above the $140,000 reserve, against $20,000, $60,000 and $90,000 in the base case.
Without the response, the house loses money in every year, and a revenue shortfall of about 15% removes Year 3 profit. With the response, the house loses $193,939 in Year 1 after start-up costs and $14,159 in Year 2. It earns $10,282 in Year 3, about 3% of revenue, then $22,498 in Year 4 and $31,486 in Year 5. Year 3 is the thinnest profitable year.
Debt service cover in this case is -2.4x in Year 1, about 1.25x in Year 2, 2.0x in Year 3, 2.3x in Year 4 and 2.6x in Year 5. A lender sets its own minimum cover ratio, which this plan does not state, and may decline to size the loan on these figures. The owner would ask the bank for a covenant holiday or a lower threshold in Years 1 and 2, or for more equity.
Year 2 breaks even at about 16% below base revenue with the owner's response in place, so the downside sits about 4 points past that line. Year-end cash is below the base case in every year, at $26,813, $32,659, $64,221, $107,769 and $144,828, and stays under the $140,000 reserve until Year 5.
In Year 1 the downside runs a little above the base case through May, because its pay and marketing cuts are spread evenly across the year and so reduce spending before the first guest arrives, and below it from June, because revenue is 20% lower and the pay cut starts in August. Its lowest month is December, at about $25,900 after receivables. Years 2 to 5 are shown at year end only.
Equity ends Year 1 at $596,061. A lender would watch Years 1 and 2 closely. With $26,813 of cash at the end of Year 1, a renovation delay or a second weak season would use the rest.
Sources
These sources are named for where to look, and none was opened for the figures in this plan. Local, state and tax rules change, so confirm each one before use.
- City of Tybee Island, short-term rental and business license pages, for zoning, registration and lodging requirements. These rules are local and change, so confirm the current requirements with the city. This plan quotes none.
- Georgia Department of Revenue, sales and use tax and local lodging tax guidance, and its corporate income tax page, which should be consulted for the current rate. This plan did not open it.
- Federal Emergency Management Agency, Flood Map Service Center, to confirm the flood zone of a specific address before pricing insurance.
- National Oceanic and Atmospheric Administration, Atlantic hurricane season, for the June 1 to November 30 season used in the storm plan.
- Internal Revenue Service, the federal corporate income tax rate (21%, Internal Revenue Code section 11) and the limit on net operating loss use to 80% of taxable income for losses after 2017 (Internal Revenue Code section 172). The Georgia rate is set by the state and is not quoted in this plan; the model carries a planning figure that an accountant replaces with the current rate before use.
- Georgia Department of Public Health and the county environmental health office, for food service requirements for serving breakfast to guests. No requirement is quoted.
- Airbnb and Booking.com publish their own host and partner terms. The 15% commission in this plan is a blended figure and not either platform's published rate.
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