Fund the largest modeled cumulative cash deficit plus an explicit operating buffer, while respecting restricted accounts and loan conditions. An annual profit figure cannot determine the required cash balance by itself.
Pebblebrook’s 2025 annual report describes seasonal fluctuations in hotel revenue and cash flow and the potential need for short-term borrowing. Its portfolio’s seasonal pattern should not be copied onto a different destination, but the disclosure demonstrates why annual averages are insufficient. (sec.gov)
Our recommended monthly cash schedule includes collections, payroll, suppliers, taxes, insurance, debt service, capital payments and reserve-account movements. Add a shorter weekly forecast when liquidity is tight or a major reopening is approaching.
Hypothetical example: after incorporating all scheduled obligations, the business has projected deficits of $70,000, $90,000 and $80,000 across three consecutive months, with no intervening surplus. The cumulative deficit is $240,000. An owner-selected $100,000 minimum unrestricted balance implies $340,000 of available opening liquidity.
That is not a universal reserve recommendation. Recalculate it for the property’s calendar, payment timing and downside case.
Separately identify guest deposits, tax collections and restricted lender reserves. Our recommended policy is not to treat cash as distributable until its associated obligations and restrictions have been reconciled.