What Is GOPPAR?

GOPPAR stands for Gross Operating Profit Per Available Room, a key performance indicator in the hospitality industry. It measures a hotel’s profitability by accounting for revenue and operational expenses. This metric is crucial because it provides a comprehensive view of a hotel’s financial health, considering both income and costs. It offers deeper insights into operational efficiency than revenue-based metrics alone. Understanding GOPPAR helps hoteliers make informed decisions to improve profitability and operational effectiveness.

Key Takeaways

  • Overall Financial Health: GOPPAR provides a holistic view of a hotel’s profitability by considering both revenue and operational costs.
  • Effective Asset Utilization: It helps assess how well the hotel utilizes its assets, specifically its room inventory.
  • Strategic Decision Making: Monitoring GOPPAR assists in strategic planning and operational adjustments to improve profitability.
  • Comparison with Other Metrics: Discusses how GOPPAR differs from and complements other metrics like RevPAR.
  • Expense Management Insight: Offers insights into the effectiveness of a hotel’s expense management strategies.

Introduction

A key performance indicator, or KPI, is a quantifiable business performance measurement. KPIs are 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 behavior. GOPPAR is one of the most important KPIs hotels use for revenue management. This article explains what GOPPAR stands for and why it is important.

GOPPAR Explained

GOPPAR is an acronym for gross operating profit per available room. It is a commonly used key performance indicator in the hotel industry. It is particularly useful for hotel owners because it gives them an idea of the bigger picture regarding their asset value.

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. Therefore, it is a good indicator of your hotel is effectiveness.

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 your hotel or resort. It can be calculated continuously, daily, or at the end of a year by dividing your total yearly operating profit by the total number of daily rooms available over the year.

Video: What Is GOPPAR?

How Is GOPPAR calculated?

The formula For GOPPAR is Gross Operating Profit / Available Rooms. Below you will find an example of 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
Rooms 4,000,000
Food and beverages 1,500,000
Other departments 500,000
Total Revenue 6,000,000
Expenses
Rooms 750,000
Food and beverages 700,000
Other departments 200,000
Undistributed 1,200,000
Total Expenses 2,850,000
Gross Operating Profit (GOP) 3,150,000
Gross Operating Profit Per Available Room (GOPPAR) 57

ADR and RevPAR

The other main KPIs hotel managers use are ADR (average daily rate) and RevPAR (revenue per available room). In contrast to GOPPAR, both metrics are concerned solely with revenue generated by rooms in your hotel, meaning that other revenue sources like bars and restaurants are ignored. For more information about other common revenue management KPIs, you can read the article “Revenue Management KPIs”.

What Is GOPPAR FAQs

Within the hotel industry, GOP stands for gross operating profit and refers to the total revenue generated by hotel operations after operating expenses are subtracted. Taxes, interest, depreciation, and amortization are excluded. GOP is used to indicate overall profitability from the main hotel operations.

GOPPAR is the gross operating profit per available room, a key performance indicator in the hotel industry. It is calculated by taking the hotel’s gross operating profit (GOP) and dividing it by the total number of rooms available. GOPPAR is one of the main ways a hotel’s operational efficiency and business health are determined and assessed.

When used in the front office, gross operating profit, or GOP, refers to the total revenue generated by front office operations after operating expenses are subtracted. Examples of front office operations include room sales or reservations and the main guest services provided by the hotel.

TRevPAR stands for total revenue per available room, and hotels use it to understand performance while factoring in all revenue streams. It can be calculated by taking the total revenue from rooms, food and drinks, and other departments and then dividing it by the total number of rooms available.

Earnings before interest, taxes, depreciation, and amortization, often shortened to EBITDA, are a great indicator of hotel performance. EBITDA can be divided by total revenue to calculate the EBITDA margin. Industry benchmarks often highlight 30% to 50% as a good target, depending on hotel size, market conditions, and other factors.

Hotels monitor several KPIs to assist with revenue management; each has its uses. GOPPAR is especially useful when considering the hotel as a whole asset. At the same time, measurements like ADR and RevPAR are more suited to assessing trends specifically related to hotel room revenue.

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This article is written by:

Martijn Barten
Hi, I am Martijn Barten, founder of Revfine.com. I am specialized in optimizing revenue by combining revenue management with marketing strategies. I have over 15 years of experience developing, implementing, and managing revenue management and marketing strategies and processes for individual properties and multi-properties.