A key performance indicator, or KPI, is a quantifiable measurement of business performance. The use of KPIs is essential for implementing a successful revenue management strategy, as it allows businesses to identify areas of success and failure, as well as trends related to demand and customer behaviour.
GOPPAR is one of the most important KPI used by hotels for the purpose of revenue management. In this article we explain what GOPPAR stands for and why it is important.
GOPPAR is an acronym, which stands for gross operating profit per available room, and this is a commonly used key performance indicator in the hotel industry. It is a particularly useful metric for hotel owners, because it gives them an idea of the bigger picture in terms of how valuable their hotel is as an asset.
Crucially, GOPPAR is concerned with the number of rooms available in your hotel, rather than the number you have sold. In addition, it looks at gross operating profit, rather than revenue generated from selling hotel rooms alone and it is, therefore, a very good indicator of how effective your hotel is overall.
Gross operating profit can be calculated by taking your gross revenue and subtracting your gross expenditure. This figure can then be divided by the number of rooms available in your hotel to give you your GOPPAR. In some cases.
Monitoring GOPPAR will allow you to spot trends in the true business performance of you hotel or resort. It can be calculated continuously, on a daily basis, or at the end of a year by dividing your total yearly operating profit by the total number of daily rooms that were available over the course of the year.
How GOPPAR is calculated?
The formula For GOPPAR is Gross Operating Profit / Available Rooms. Below you find an example how GOPPAR is calculated.
|Number of rooms||150|
|Days in a year||365|
|Total number of rooms available per year||54,750|
|Revenues per department|
|Food and beverages||1,500,000|
|Food and beverages||700,000|
|Gross Operating Profit (GOP)||3,150,000|
|Gross Operating Profit Per Available Room (GOPPAR)||57|
ADR and RevPAR
Two of the other main KPIs used by hotel managers are ADR (average daily rate) and RevPAR (revenue per available room). By contrast to GOPPAR both of these metrics are concerned solely with revenue generated by rooms in your hotel, meaning that other revenue sources like bars and restaurants are ignored. More information about other common revenue management KPI’s, you can read in the article “Revenue management KPI’s”.
There are a number of KPIs monitored by hotels to assist with revenue management and they each have their own uses. GOPPAR is especially good when looking at the hotel as a whole asset, while measurements like ADR and RevPAR are more suited to assessing trends specifically related to hotel room revenue.