GOPPAR (Gross Operating Profit Per Available Room) is a significant performance metric used in the hotel industry. It measures the profitability of a hotel on a per-available-room basis. GOPPAR gives hotel owners and investors insight into the financial health and operational efficiency of a hotel property.
What is GOPPAR?
GOPPAR is calculated by taking the hotel's gross operating profit and dividing it by the total number of available rooms over a given time period.
Gross operating profit is a hotel's total revenue minus its operating expenses. So GOPPAR reveals the profit per available room after accounting for operating costs.
This metric differs from RevPAR (revenue per available room), which only looks at revenue. GOPPAR analyzes profitability.
The GOPPAR Formula
The formula to calculate GOPPAR is:
GOPPAR = Gross Operating Profit/Available Rooms
Where:
Gross operating profit = Total revenue - Total operating expenses
Available rooms = Total rooms in the hotel * Number of days in the period
Let's look at an example:
A hotel has 300 rooms
In one month, it had total revenue of $1,500,000 and total operating expenses of $1,000,000.
So the gross operating profit was $1,500,000 - $1,000,000 = $500,000.
With 300 rooms and 30 days in the month, the available rooms were 300*30 = 9,000.
GOPPAR would be the gross operating profit of $500,000 divided by the number of available rooms 9,000, equaling $55.56 per room.
So the GOPPAR for this hotel is $55.56, meaning each available room earned $55.56 in profit for the month.
How is GOPPAR Used?
Hotel managers use GOPPAR to evaluate the operational efficiency and profit-generating ability of a hotel. Comparing GOPPAR between different properties in a portfolio shows which hotels are most profitable on a per room basis.
Tracking GOPPAR over time measures improvement. Hotels aim to increase GOPPAR each year by raising room rates and minimizing costs.
For hotel investors, GOPPAR indicates the return on investment in a hotel asset. It's a key measurement of hotel profitability.
Benchmarking GOPPAR
The industry average GOPPAR differs across hotel segments and regions. Luxury and full-service hotels typically have higher GOPPAR than midscale and economy hotels. And average GOPPAR varies greatly between locations.
Hotels can maximize GOPPAR by increasing ADR (average daily rate) and controlling costs through careful staffing, maintenance, and overhead spending. Having automated systems and energy efficient facilities also helps optimize profitability.
How a PMS Helps GOPPAR
Implementing a robust property management system (PMS) like Booking Ninjas can help hotels enhance GOPPAR performance in several ways:
- Automated room allocation and dynamic pricing helps maximize occupancy and ADR (average daily rate) to drive higher revenue.
- Integrated point-of-sale systems and revenue management tools provide data-driven insights to optimize pricing and profits.
- Streamlined reservations management reduces wasted rooms from overbooking and no-shows.
- Digital check-in/out, housekeeping optimization, and maintenance tracking minimizes labor costs.
- Centralized reporting provides real-time visibility into GOPPAR and other KPIs to support data-based decisions.
- Integrations with sales platforms assist cross-selling and upselling opportunities.
A modern, cloud-based PMS gives hotels the technology foundation to monitor GOPPAR regularly. This allows managers to identify high-performing periods to replicate success. Hotels can also pinpoint low GOPPAR dates to address profitability issues through better revenue management.
By leveraging the right property management tools, hotels can maximize room occupancy and ADR, while optimizing operational efficiency. This drives higher GOPPAR and ultimately improves the bottom line.
Key Takeaways
- GOPPAR is a hotel metric that measures profit per available room.
- Unlike RevPAR, GOPPAR analyzes profitability rather than just revenue.
- Hotel managers use GOPPAR to evaluate property performance, set targets, and optimize profitability over time.
- For hotel owners and investors, GOPPAR offers insight into the financial health and ROI of a hotel asset.
Tracking GOPPAR regularly and comparing to industry benchmarks allows hotels to monitor their financial performance and take steps to improve operational efficiency. In today's competitive hospitality industry, understanding and maximizing GOPPAR is key to unlocking success.
