Cost per occupied room (CPOR) is a formula used to calculate the average cost of a guest occupying a room. It is a key performance indicator that helps hotels understand profitability. As a hotel lowers its CPOR, it can increase profits per available room and/or become more competitive.
Reducing CPOR is one of the quickest ways a property can increase its profit margins. Examples of line items used to calculate the cost of an occupied room include housekeeping, laundry, heating and air conditioning, Internet, cleaning supplies, and anything else related to keeping a room ready for guests.
What is CPOR Used For?
CPOR helps properties calculate the average costs of renting out a room. This cost directly impacts a property’s profit per available room (PROFPAR). Comparing CPOR to PROFPAR allows hotels to track and measure their overall efficiency. It also provides insights into strategies that can improve financial performance.
Benefits of CPOR
Understanding CPOR helps revenue managers measure costs, evaluate whether those costs are reasonable, and develop strategies to reduce them. And by reducing CPOR, hotels can increase RevPAR and GOPPAR , which are essential hotel KPIs for measuring a property’s overall profitability.
Limitations of CPOR
CPOR is just one of many hotel KPIs used in revenue management. While reducing CPOR is an effective strategy to increase margins without altering prices or developing new revenue streams, it does not provide direct insight into a hotel’s financial performance.
How is CPOR Calculated
CPOR is calculated by dividing the total costs of room operations by the number of rooms sold. This can be calculated for different periods, including daily, monthly, and annually.
Example of CPOR Calculation
Total Cost of Room Operations Department = $10,000
Number of Rooms Sold = 160
CPOR = 200,000 (Total Cost of Room Ops) / 165 (# of rooms sold) = $62.50