RevPAR versus GOPPAR
RevPAR vs GOPPAR compares two key hotel industry metrics: Revenue Per Available Room and Gross Operating Profit Per Available Room. RevPAR measures average room revenue, while GOPPAR assesses overall profitability, including operational costs. This comparison is crucial for hotels to balance revenue generation with cost control for optimal financial health.
Key Takeaways
- Different Focus: RevPAR focuses on revenue from room sales, whereas GOPPAR considers overall profit, including all revenue and expenses.
- Calculation Methods: RevPAR is calculated by dividing room revenue by rooms available or ADR x occupancy rate, while GOPPAR uses gross operating profit.
- Comprehensive Analysis: GOPPAR provides a more rounded view of hotel performance, including revenue generation and cost efficiency.
- Different Measurement Focus: RevPAR measures revenue from room sales, while GOPPAR accounts for overall profit, including all revenue and expenses.
- Calculation Methodologies: RevPAR uses room revenue and available rooms, whereas GOPPAR involves gross operating profit and available rooms.
Introduction
Revenue per available room, or RevPAR, and gross operating profit per available room, or GOPPAR, are two of the most vital KPIs available to hotel managers. Both form an important part of any effective revenue management strategy. Both metrics concern themselves with occupancy rates, but they detail very different things, as one is centered around money being brought in, while the other is based on overall profit.
How Do You Calculate RevPAR and GOPPAR?
The revenue management metrics RevPAR and GOPPAR both have fairly simple formulas, which are as follows:
RevPAR = Rooms Revenue / Rooms Available OR RevPAR = Average Daily Rate x Occupancy Rate
GOPPAR = Gross Operating Profit / Available Rooms
Gross operating profit can be calculated by subtracting expenses away from revenue generated.
RevPAR vs. GOPPAR
The RevPAR KPI is utilized by those operating in hotel management to tell them how much revenue they are generating per available room in their hotel. Its primary value is telling hotel owners their revenue from selling hotel rooms directly related to their occupancy rate. However, crucially, it concerns itself only with money coming in.
On the other hand, GOPPAR factors in expenses and revenue, giving hotel owners their overall profit concerning occupancy rate. Unlike RevPAR, it is not concerned only with revenue generated by selling rooms, but includes all revenue. This gives a rounded view of overall performance, including how effectively the business makes money and fills rooms. As a result, it can give an idea of how valuable a hotel is as a business.
For more detailed information about RevPAR and GOPPAR, please also read the articles “What is RevPAR?” and “What is GOPPAR”.
More Tips to Grow Your Business
Revfine.com is a knowledge platform for the hospitality & travel industry. Professionals use our insights, strategies and actionable tips to get inspired, optimise revenue, innovate processes and improve customer experience. You can find all hotel & hospitality tips in the categories Revenue Management, Marketing & Distribution, Hotel Operations, Staffing & Career, Technology and Software.This article is written by:
Leave A Comment