GOPPAR in hospitality What is it, how to calculate it and how to improve the profitability of your hotel?
What is GOPPAR and why is it important?
The GOPPAR (Gross Operating Profit per Available Room) is an essential metric in hotel management. Unlike other indicators such as RevPAR, which only measures revenue per available room, GOPPAR assesses net profitability, considering both revenue and operating costs. This makes it a key tool for hoteliers looking to improve their financial and operational efficiency.
GOPPAR definition and its relevance to the hotel industry
The GOPPAR is the result of dividing the Gross Operating Profit (GOP) by the number of rooms available in a given period. It is used to measure the real profitability of a hotel, as it takes into account not only the revenues, but also the expenses associated with the operation.
Hoteliers use it to understand how factors such as occupancy, rates, fixed and variable costs impact overall profitability. Unlike the RevPARGOPPAR, which only reflects revenue per room, shows the ability of the business to generate profits after covering its operating costs.
How GOPPAR measures a hotel's operational efficiency
GOPPAR is a more accurate indicator of a hotel's financial health. It allows managers to:
- Identify areas where costs can be reduced without affecting the guest experience.
- Assessing the real profitability of different market segments or room types.
- Benchmark a hotel's performance against competitors or within a hotel chain.
- Adjust pricing strategies, promotions and operating costs to maximise profitability.
GOPPAR formula and calculation step by step
Key components of Gross Operating Profit (GOP)
The GOP Gross Operating Profit (GOP) is obtained by subtracting all operating costs from the hotel's total revenue. Some of the key components that affect GOP include:
- Total Hotel RevenuesIncludes rooms, food and beverage, events, spa and other additional services.
- Operational CostsPersonnel costs, supplies, maintenance, distribution costs, marketing, etc.
- Gross Operating Profit (GOP)The difference between total revenues and operating costs.
Formula to calculate GOPPAR correctly
The formula of the GOPPAR en:
GOPPAR = GOP / Rooms Available
- GOP (Gross Operating Profit) is the gross operating profit of the hotel.
- Available Rooms is the total number of rooms available in a given period.
Benefits of using GOPPAR in hotel management
The use of GOPPAR brings numerous advantages to hotel management.
Cost optimisation and profitability per room
GOPPAR helps hoteliers to understand the relationship between revenue and expenditure, which allows them to identify opportunities to reduce costs without sacrificing quality of the service.
Identification of areas for improvement in operating revenues
GOPPAR analysis facilitates strategic decision-making, such as:
- Adjust tariffs according to actual profitability.
- Evaluate the impact of promotions and discounts.
- Redirect investment to the most profitable areas.
Using GOPPAR for strategic decision making
Hoteliers can use GOPPAR to benchmark their performance against competitors and make strategic adjustments based on market trends.
Tools and software to calculate and analyse GOPPAR
To optimise hotel profitability, it is essential to have specialised tools to calculate and analyse GOPPAR in real time. These solutions not only facilitate financial management, but also improve strategic decision making.
Hotel management systems (PMS) with financial modules
The Modern PMS integrate advanced financial modules that automate the calculation of GOPPAR and other essential KPIs. These systems enable:
- Record revenues and costs in real time.
- Generate detailed reports on the profitability of each room.
- Identify opportunities to optimise operational costs.
Some Advanced PMS They even offer intuitive dashboards where hoteliers can visualise GOPPAR trends and adjust their revenue strategies accordingly.
Revenue management software to optimise GOPPAR
The systems of Revenue Management use artificial intelligence and predictive analytics to:
- Adjust tariffs dynamically according to demand and competition.
- Forecast expected profitability under different occupancy scenarios.
- Balancing revenue and operating costs to maximise the GOPPAR.
These softwares are key for hotels looking for automate price management and maximise their profitability without neglecting costs.
Integration of accounting tools with profitability analysis
To obtain a complete picture of financial performance, many hotels integrate their financial performance accounting systems with PMS and revenue management software. This allows:
- Unify revenue, cost and profitability information in a single system.
- Generate more accurate and detailed financial reports.
- Improve evidence-based long-term strategic planning.
With these tools in place, hoteliers can make informed decisions and improve the operational profitability of their business.
Comparison of GOPPAR with other key metrics
Differences between GOPPAR and RevPAR: Which is more useful?
- RevPAR (Revenue per Available Room) measures only the revenue per available room, without considering costs.
- GOPPARinstead, it shows the actual profitability of the hotel, after deducting operating expenses.
In terms of financial analysis, GOPPAR is more comprehensive as it reflects operational efficiency.
When to use GOPPAR instead of RevPAR to evaluate performance
If the objective is to understand the true profitability of the hotel, GOPPAR is the best option. On the other hand, if the objective is to evaluate only the revenue generated per room, RevPAR may be sufficient.
Use of GOPPAR in conjunction with other financial KPIs
GOPPAR should be analysed in conjunction with other metrics such as the TRevPAR (Total Revenue per Available Room) and the EBITDA to get a more complete picture of the hotel's financial performance.
How to integrate operational and revenue metrics into a comprehensive analysis
For effective hotel management, it is advisable to combine GOPPAR analysis with other key indicators such as the ADR (Average Daily Rate)The occupancy rate and the CPOR (Cost per Occupied Room)