Is a homestay business profitable? Worked numbers for 3, 6 and 10 rooms
HostBooking · · 9 min read
A homestay makes money when the nights it sells cover its fixed monthly costs, after laundry, supplies and OTA commission on each night. In this post’s example, all three sizes, 3, 6 and 10 rooms, need about 47–49% occupancy to break even, and take close to three years to pay back their capital at 60% occupancy.
The short answer
It can be profitable, but not by default. A homestay in a rented house has two kinds of cost: fixed costs you pay even when rooms are empty (rent, wages, utilities) and per-night costs that only arise when a guest stays (laundry, single-use supplies, OTA commission). Profit or loss depends on whether you sell enough nights to cover the fixed part, and on how much each night leaves after its per-night costs.
The assumptions
Every figure below is an assumption to show the method, not surveyed market data. Rent, building work, wages and room rates vary a great deal between cities and even between streets. Replace them with your own quotes.
- All three homestays are in a rented whole house; no land purchase.
- Average daily rate (ADR) of VND 700,000 a night, the same at all three sizes.
- Per-night costs (laundry, single-use supplies): VND 60,000 for each occupied night.
- Half the nights come from OTAs at 18% commission (mid-way in the usual 15–20%), half are direct bookings. Average commission per night: 50% × 18% × 700,000 = VND 63,000.
- A 30-night month. Average occupancy over the year: 60%.
So each night sold leaves 700,000 − 60,000 − 63,000 = VND 577,000 to cover fixed costs. That figure applies to all three sizes below.
Startup capital for 3, 6 and 10 rooms
| Item (VND million) | 3 rooms | 6 rooms | 10 rooms |
|---|---|---|---|
| Rent deposit (3 months’ rent) | 36 | 66 | 105 |
| Renovation: paint, wiring, plumbing, bathrooms | 55 | 120 | 200 |
| Furniture (35 million a room) | 105 | 210 | 350 |
| Linen and supplies (6 million a room) | 18 | 36 | 60 |
| Fire safety, photos, signage, paperwork | 11 | 20 | 40 |
| Total capital spent | 225 | 452 | 755 |
The table leaves out a reserve. Keep roughly three months of fixed costs aside for the first months without reviews and for low season. A more detailed list of items for a 5-room homestay is in homestay startup costs.
Fixed monthly costs
| Item (VND million a month) | 3 rooms | 6 rooms | 10 rooms |
|---|---|---|---|
| Rent | 12 | 22 | 35 |
| Electricity, water, internet | 5 | 9 | 15 |
| Wages | 6 (1 part-time cleaner) | 15 (1 manager, 1 cleaner) | 27 (1 manager, 2 cleaners) |
| Maintenance, software, other | 2 | 3 | 5 |
| Total fixed costs | 25 | 49 | 82 |
At 3 rooms the example assumes the owner manages the place and pays no wage to themselves. If you count one, the profit below falls by exactly that amount.
Monthly profit at 60% occupancy
| VND million a month | 3 rooms | 6 rooms | 10 rooms |
|---|---|---|---|
| Room-nights available | 90 | 180 | 300 |
| Nights sold (60%) | 54 | 108 | 180 |
| Revenue (× 700,000) | 37.8 | 75.6 | 126.0 |
| Laundry, supplies (× 60,000) | 3.24 | 6.48 | 10.8 |
| OTA commission (× 63,000) | 3.40 | 6.80 | 11.34 |
| Left after per-night costs | 31.16 | 62.32 | 103.86 |
| Fixed costs | 25 | 49 | 82 |
| Profit before tax | 6.16 | 13.32 | 21.86 |
Break-even occupancy and payback
- Break-even nights = fixed costs ÷ VND 577,000, rounded up: 44 nights for 3 rooms, 85 nights for 6 rooms, 143 nights for 10 rooms a month.
- Break-even occupancy = break-even nights ÷ nights available: 44 ÷ 90 ≈ 49%, 85 ÷ 180 ≈ 47%, 143 ÷ 300 ≈ 48%.
- Payback = total capital ÷ monthly profit: 225 ÷ 6.16 ≈ 37 months, 452 ÷ 13.32 ≈ 34 months, 755 ÷ 21.86 ≈ 35 months.
What the example shows: a bigger homestay makes more profit in absolute terms, but break-even occupancy barely moves, because fixed costs grow roughly with the number of rooms. More rooms do not make a homestay safer by themselves; the room rate and occupancy decide.
What changes the result most?
Take the 6-room homestay as the base (capital 452 million, fixed costs 49 million a month) and change one assumption at a time:
| Scenario | Left per night | Profit/month | Break-even occupancy | Payback |
|---|---|---|---|---|
| As in the example | VND 577,000 | 13.3 million | 47% | ~34 months |
| Occupancy 45% | VND 577,000 | −2.3 million | 47% | Loss |
| Occupancy 75% | VND 577,000 | 28.9 million | 47% | ~16 months |
| ADR VND 800,000 | VND 668,000 | 23.1 million | 41% | ~20 months |
| OTA commission 15% | VND 587,500 | 14.5 million | 47% | ~31 months |
| OTA commission 20% | VND 570,000 | 12.6 million | 48% | ~36 months |
| 80% of nights via OTAs (18%) | VND 539,200 | 9.2 million | 51% | ~49 months |
| All guests direct | VND 640,000 | 20.1 million | 43% | ~22 months |
Occupancy is the strongest lever: 15 percentage points turn a 13 million profit into a 2 million loss. Next is the room rate: an extra VND 100,000 a night goes almost straight to profit. Whether commission is 15% or 20% matters less than the share of nights you have to sell through OTAs. Pricing by season and by channel is covered in homestay room pricing; measuring occupancy, ADR and RevPAR in ADR, RevPAR and occupancy.
What makes a homestay profitable or not
- Location: it sets both the room rate and occupancy. A place with guests all year (central, near sights, near offices for business travellers) can carry a higher rent than one that is only busy at weekends.
- Seasonality: many destinations have a few peak months and a few very quiet ones. Work out profit on average occupancy over the year, not the busiest month, and keep a reserve for low season.
- Dependence on OTAs: OTAs bring guests quickly, but every night through them gives up part of its revenue. In the example, going from 80% OTA nights to none lifts monthly profit from 9.2 to 20.1 million.
- Direct bookings: your own booking website, a Google Maps listing, returning guests. See relying less on Booking and Agoda.
- The lease: payback is close to three years, so the lease should run longer than that and state how much the rent may rise.
- Tax: the 10-room homestay in the example takes about VND 1.51 billion a year, above the 1 billion threshold, so tax is due; the profit in the tables is before tax. See Vietnam homestay tax 2026.
Run it with your own numbers
Enter your rent, rooms, room rate, occupancy and OTA commission in the homestay profit calculator to get monthly profit, break-even occupancy and payback for your own case. Once you are open, record real costs and compare them with the plan each month: in HostBooking, bookings feed revenue automatically, you log expenses by category and see profit and loss month by month. HostBooking takes no percentage of bookings, see pricing.
Frequently asked questions
Is a homestay business profitable?
It can be, when average occupancy over the year is above break-even. In this post’s example (assumptions, not market data), rented homestays of 3, 6 and 10 rooms need about 47–49% occupancy to break even, and make roughly VND 6, 13 and 22 million a month before tax at 60% occupancy.
How long does a homestay take to pay back?
Divide the capital spent by monthly profit. In the example, at 60% occupancy all three sizes take about 34–37 months. At 75% occupancy the 6-room homestay needs only about 16 months.
What occupancy does a homestay need to break even?
Break-even occupancy = fixed monthly costs ÷ (room rate − per-night costs − average commission per night) ÷ room-nights available. With this post’s assumptions, about 47–49%.
Is a bigger homestay more profitable than a small one?
It makes more profit in absolute terms, but its break-even occupancy is not necessarily lower, because rent and wages grow with the number of rooms too. In the example, 3, 6 and 10 rooms all break even around 47–49%.
How much does 15% or 20% OTA commission matter?
For the 6-room homestay in the example, monthly profit is 14.5 million at 15% and 12.6 million at 20%. The share of nights sold through OTAs matters more: with 80% of nights via OTAs profit drops to 9.2 million, with all guests direct it rises to 20.1 million.