Gross Operating Profit per Available Room (GOPPAR)
Gross Operating Profit per Available Room (GOPPAR) is an important KPI that helps hotels adjust revenue against the costs incurred in generating that revenue. It is used in hotel revenue management to maximize a property’s profitability by factoring operational costs into its forecasting.
Some examples of operation costs taken into account when calculating GOPPAR include energy consumption, housekeeping, Internet, laundry, and food and beverage. By factoring in these operational costs, GOPPAR provides a more complete picture of operating costs per room, allowing hotel operators to more accurately calculate overall profitability.
What is GOPPAR Used For?
GOPPAR is used to forecast the profitability for available rooms during a given time period. It compares room revenue to actual costs incurred over that time period. This provides insight into the GOP of an available room during that period. That number can then be used to forecast profitability projections of the entire property for that period.
Benefits of GOPPAR
Calculating GOPPAR is an effective profit maximization strategy because it accounts for a broad scope of hotel operational criteria. With that understanding, hotel operators can calculate the overall performance of a property, and make adjustments accordingly. By accounting for all the factors that impact Gross Operating Profit, properties can make more impactful changes to increase profitability.
How is GOPPAR Calculated
GOPPAR is calculated by dividing annual Gross Operating Profit (GOP) by the total number of rooms available per year. It also involves prior calculations, such as subtracting total operating costs from total revenue to get GOP and multiplying the number of rooms in the property by 365 (number of days in a year). 256
Example of GOPPAR Calculation
Let’s use a 100-room hotel that makes $10,000,000 in annual revenue and has annual operating costs of $200,000.
Number of Rooms = 100
Number of Rooms Available Per Year = 36,500
Total Revenue = $10,000,000
Total Expenses = $2,000,000
GOP = $10,000,000 (Total Revenue) – $2,000,000 (Total Expenses) = $8,000,000
GOPPAR = $8,000,000 (GOP) / 36,500 (# of rooms/year) = $219.18