GOPPAR (Gross Operating Profit Per Available Room) is an essential metric for evaluating a hotel’s profitability. Unlike RevPAR, which considers only room revenue, GOPPAR includes all operating revenues and costs, providing a complete view of a hotel’s economic efficiency.
What is GOPPAR?
GOPPAR measures the gross operating profit divided by the total number of available rooms, providing a detailed analysis of the profit generated per available room, net of operating costs.
How to Calculate GOPPAR
GOPPAR = GOPTAR
Where GOP (Gross Operating Profit) is the hotel’s operating profit, calculated by subtracting total operating costs from total revenue.
TAR (Total Available Rooms) represents the total daily number of rooms available to be sold in a given period.
Example of GOPPAR Calculation
Suppose a hotel generates a total of €1,000,000 in revenue and incurs €600,000 in operating costs, with 50 rooms available over 100 operating days. GOPPAR would be:
The GOP is 1,000,000 – 600,000 = €400,000
The TAR is 50 x 100 = 5,000
GOPPAR = €400,000 / 5,000 = €80
This value indicates that, on average, each available room contributed €80 to the hotel’s gross operating profit.
Importance of GOPPAR
GOPPAR is crucial for:
- Profitability Assessment: It provides an accurate measure of the actual profit per room per night, considering both revenues and costs.
- Strategic Decisions: It informs investment, pricing, and cost-saving strategy decisions.
- Benchmarking: It enables meaningful comparisons with other hotels to improve management.
Strategies to Improve GOPPAR
- Revenue Optimization: Increasing revenue not only from rooms but also from additional services like restaurants, spas, and others raises GOP and thus helps improve profit per room.
- Cost Containment: Reducing operating costs without compromising service quality, such as by enhancing energy efficiency and optimizing resources.
- Continuous Monitoring and Analysis: Using data to assess the effectiveness of implemented strategies and making adjustments as necessary is an excellent way to improve not only this but all revenue KPIs.