GOPPAR (Gross Operating Profit per Available Room)

What is the definition of GOPPAR in the hotel industry?

‍

GOPPAR (Gross Operating Profit per Available Room) is a hotel industry metric that measures a hotel's overall financial performance. It is calculated by dividing the total gross operating profit by the total number of available rooms in the hotel. GOPPAR is used to evaluate the revenue-generating potential of a hotel and is an important indicator of a hotel's financial health.

GOPPAR can vary significantly across different hotel types depending on a variety of factors. Luxury hotels tend to have higher GOPPARs than economy and mid-range hotels due to their higher average daily rates and higher occupancy levels. Hotels in large cities, such as New York or London, can also have higher GOPPARs than hotels in more rural areas due to higher demand and higher average daily rates.

‍

Elements that can impact a hotel's GOPPAR include: 

• Occupancy Rate
• Average Daily Rate
• Revenue per Available Room 
• Operating Expenses

‍

The hotel's pricing strategy, marketing efforts, cost structure, and service offerings also play a role in determining a hotel's GOPPAR.

What is the GOPPAR formula?

GOPPAR is calculated by dividing the hotel's total gross operating profit (GOP) by the total number of available rooms. 

‍

The GOPPAR formula is: GOPPAR = (Revenue from Rooms – Operating Expenses) / (Number of Available Rooms in a Period)

‍

‍

For example, if a hotel had a total of 100 rooms available, and the total revenue from those rooms was $10,000, and the total operating expenses were $2,000, then the GOPPAR would be ($10,000 - $2,000) / 100 = $80.

‍

How do you improve GOPPAR at a hotel?

‍

There are many ways that hotel owners and operators can increase GOPPAR at their properties, including:

1. Increase the average room rate: One of the most effective ways to improve GOPPAR at a hotel is to increase the average room rate. This can be done by implementing a dynamic pricing strategy and offering more premium room options.
2. Increase occupancy rates: To improve GOPPAR, it is important to increase occupancy rates as this will increase revenue and therefore overall profits. This can be done by marketing the hotel more effectively and offering special discounts and promotions to encourage potential guests to book.
3. Focus on quality: Improving the quality of the hotel’s services is another great way to improve GOPPAR. This can include investing in better furnishings, higher quality amenities, and better customer service.
4. Reduce expenses: Reducing expenses is essential in order to improve GOPPAR. This can be done by streamlining operations, cutting back on unnecessary services, and reducing staff.
5. Increase ancillary revenue: Increasing ancillary revenue such as room service, spa services, and other add-ons can help to improve GOPPAR. This can be done by offering attractive packages and promotions to guests.

‍