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The hospitality business is a balancing act. While occupancy rates and revenue growth are essential pieces of the puzzle, neither tells the whole story of profitability. For 2025 and beyond, Gross Operating Profit Per Available Room (or GOPPAR) is emerging as the financial compass future-oriented hoteliers rely on to steer their operations.
This blog dives into what GOPPAR is, how it is calculated, and why it is becoming a vital metric for hotels. From real-world examples to strategies for improvement, we will give you everything you need to ensure your property thrives in a competitive market.
To understand GOPPAR, we first need to break down Gross Operating Profit (GOP).
Gross Operating Profit is the total revenue a hotel generates minus its operating expenses. These expenses include payroll, utilities, repairs, and general administration costs, but exclude taxes, interest, and depreciation.
This metric is more than a big number on a balance sheet. It reflects how efficiently a hotel converts revenue into profit after covering core expenses. Understanding GOP helps hotel owners and managers see past revenue figures and focus on their operational performance.
Some confuse Gross Operating Profit with gross profit – which only factors in revenue minus the cost of goods sold. GOP goes a step deeper, encompassing all operating costs, giving a more nuanced view of financial health.
Now, what sets GOPPAR apart? GOPPAR stands for Gross Operating Profit Per Available Room, and it measures the profit generated for every room available in the hotel – whether it is occupied or not.
Every successful hotelier must understand how to calculate this key performance indicator. Here is how it is done.
GOPPAR = {Gross Operating Profit} ÷ {Total Available Rooms}
Imagine a 100-room boutique hotel generating €1,000,000 in total revenue in a month, with €700,000 in operational costs. The GOP would be €300,000. Divide that by 100 rooms, and your GOPPAR equals €3,000 per room.
This figure allows revenue managers and owners to assess whether they are operating efficiently or leaving money on the table.
To fully appreciate GOPPAR’s importance, it’s worth understanding how it compares to other popular metrics.
The hospitality industry has experienced a paradigm shift, and profitability metrics like GOPPAR are now at the forefront.
The days of chasing high occupancy rates at the cost of deep discounts are gone. Profitability is now the primary goal, and GOPPAR is the clearest way to measure it.
Rising costs, shifting guest behaviours, and economic unpredictability make metrics like GOPPAR critical for assessing financial resilience.
Revenue management, operations, and marketing must align to optimise operational efficiency – a necessity for GOPPAR improvement.
Want to boost your GOPPAR? These actionable strategies will put you on the right track.
Understanding what constitutes a strong performance depends on various factors.
Luxury hotels typically achieve higher GOPPAR (Gross Operating Profit Per Available Room) by leveraging premium pricing and offering exclusive experiences with high-end amenities. For budget hotels, the approach is different – they focus on filling more rooms and keeping costs under control to stay profitable. This difference shows how hotels tailor their strategies based on their audience and market position.
Analyse your own GOPPAR historically and against competitors to identify strengths and opportunities for improvement.
Gross Operating Profit Per Available Room (GOPPAR) isn’t just another acronym – it is a window into your hotel’s true profitability. By focusing on both revenue and operational efficiency, this metric will help your property thrive in a competitive hospitality landscape.
Want to simplify your processes and start improving your performance today? Consider tools like HiJiffy for automation and better insights into your hotel’s performance. With the right strategies and technology, stronger financial performance is within reach.
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