We talked previously about metrics like Revenue Per Available Room (RevPAR) and Average Daily Rate (ADR) which make it possible to understand the performance of rooms (or beds) across a property or in comparison with others. But what they don’t take into account are the expenses that are incurred by the operation of the property. Gross Operating Profit Per Available Room (GOPPAR) combines these factors into a powerful benchmark of whole property performance.
How is GOPPAR calculated?
Unlike RevPAR, GOPPAR subtracts the operating costs like staff wages, cleaning, food and beverages from the income generated by bookings. It can be calculated as a daily KPI or as an annual exercise, using the total “room nights” available over 365 days. A low or negative GOPPAR indicates that the revenue generated per room is not enough to offset running costs.
How do I increase GOPPAR?
Calculating GOPPAR gives hotel management teams an appreciation of all the levers they can pull to improve the performance of their entire property. The optimisation of room pricing is one area where revenue can be increased significantly without making changes to the building or staff. Revenue Management tools like Prix make it easy to see where prices can be changed to drive profits and grow occupancy.
GOPPAR vs. RevPAR
If you’ve established the lever you want to pull to improve your property’s overall profitability is price rather than running costs, then RevPAR allows you to focus on the price and mix of room types in your property.