how much to spend on rent/location relative to income

[DDIXON]

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?