How To Calculate Goppar

Calculate your Gross Operating Profit Per Available Room (GOPPAR) with this interactive tool. Enter your hotel’s financial data to get instant results and visual analysis.

Complete Guide to Calculating GOPPAR (Gross Operating Profit Per Available Room)

GOPPAR (Gross Operating Profit Per Available Room) is one of the most important financial metrics in the hotel industry. It provides a comprehensive view of a hotel’s profitability by considering both revenue and operating expenses relative to the total number of available rooms.

What is GOPPAR?

GOPPAR measures the gross operating profit generated per available room, regardless of whether the room is occupied or not. Unlike RevPAR (Revenue Per Available Room) which only considers revenue, GOPPAR accounts for both revenue and operating expenses, giving hotel owners and managers a clearer picture of actual profitability.

The formula for calculating GOPPAR is:

GOPPAR = (Total Revenue – Total Operating Expenses) / Total Available Rooms

Why GOPPAR Matters More Than RevPAR

While RevPAR is a useful metric for measuring revenue performance, it doesn’t tell the whole story about a hotel’s financial health. Here’s why GOPPAR is superior:

• Comprehensive profitability measure: GOPPAR accounts for both revenue and expenses, showing true profitability
• Better for cost management: Helps identify areas where expenses can be reduced to improve profitability
• More accurate benchmarking: Allows for fairer comparisons between hotels with different cost structures
• Investor-friendly metric: Provides the financial performance data that investors and lenders want to see

How to Calculate GOPPAR Step by Step

1. Calculate Total Revenue:

   Sum all revenue sources including:

   • Rooms revenue
   • Food and beverage revenue
   • Other operated departments (spa, golf, etc.)
   • Miscellaneous income
2. Calculate Total Operating Expenses:

   Sum all operating expenses including:

   • Rooms department expenses
   • Food and beverage department expenses
   • Other operated department expenses
   • Undistributed expenses (administrative, sales, marketing, property operations, etc.)
3. Determine Gross Operating Profit (GOP):

   Subtract total operating expenses from total revenue:

   GOP = Total Revenue – Total Operating Expenses

4. Count Total Available Rooms:

   Multiply the number of rooms by the number of days in the period being measured.

   For example, a 100-room hotel over 30 days would have 3,000 available room nights.

5. Calculate GOPPAR:

   Divide the Gross Operating Profit by the total available rooms:

   GOPPAR = GOP / Total Available Rooms

Industry Benchmarks and Standards

GOPPAR varies significantly by hotel type, location, and market segment. Here are some general benchmarks:

Hotel Type	Average GOPPAR (USD)	High Performer GOPPAR (USD)
Luxury Hotels	$85 – $120	$150+
Upper Upscale	$60 – $90	$110+
Upscale	$40 – $70	$85+
Upper Midscale	$25 – $50	$60+
Midscale	$15 – $35	$45+
Economy	$10 – $25	$35+

Industry Source:

According to the American Hotel & Lodging Association (AHLA), GOPPAR has become the preferred metric for hotel valuation and performance assessment, replacing RevPAR in many financial analyses.

GOPPAR vs Other Hotel Performance Metrics

Metric	What It Measures	Strengths	Weaknesses
GOPPAR	Gross Operating Profit per Available Room	Comprehensive profitability measure, accounts for both revenue and expenses	Requires detailed financial data, doesn’t account for non-operating income/expenses
RevPAR	Revenue per Available Room	Simple to calculate, good for revenue comparison	Ignores expenses, can be misleading about actual profitability
ADR	Average Daily Rate	Shows pricing power, easy to understand	Ignores occupancy and expenses, limited view of performance
Occupancy %	Percentage of rooms occupied	Simple demand indicator, easy to track	No revenue or profit information, can be misleading without rate data
NOI	Net Operating Income	Comprehensive profit measure, includes all operating income/expenses	More complex to calculate, doesn’t normalize for room count

Strategies to Improve Your GOPPAR

1. Revenue Optimization:
   • Implement dynamic pricing strategies
   • Upsell premium rooms and services
   • Develop packages that bundle rooms with high-margin services
   • Optimize distribution channels to reduce commission costs
2. Expense Management:
   • Implement energy-saving initiatives to reduce utility costs
   • Negotiate better rates with suppliers
   • Cross-train staff to improve labor efficiency
   • Implement preventive maintenance to reduce repair costs
3. Ancillary Revenue Development:
   • Expand food and beverage offerings
   • Add revenue-generating amenities (spa, fitness classes, etc.)
   • Create co-working spaces for remote workers
   • Offer local experience packages
4. Operational Efficiency:
   • Implement property management systems to automate processes
   • Use data analytics to forecast demand and optimize staffing
   • Streamline housekeeping processes
   • Implement self-service check-in/out options

Common Mistakes in GOPPAR Calculation

• Incorrect Expense Allocation:

  Failing to properly allocate undistributed expenses can significantly skew your GOPPAR calculation. Make sure all operating expenses are accounted for in the correct departments.

• Ignoring Seasonal Variations:

  GOPPAR can vary dramatically by season. Always compare to the same period in previous years rather than sequential months.

• Not Adjusting for Room Count Changes:

  If your hotel has added or removed rooms, make sure to use the correct room count for the period being measured.

• Mixing Time Periods:

  Ensure all revenue and expense data covers the exact same time period to avoid calculation errors.

• Overlooking Non-Room Revenue:

  Many hotels focus only on room revenue but forget to include other significant revenue sources like F&B, spa, or parking.

Advanced GOPPAR Analysis Techniques

For sophisticated hotel financial analysis, consider these advanced techniques:

1. GOPPAR Index:

   Compare your GOPPAR to a competitive set to determine your market position. A GOPPAR index of 100 means you’re performing at the market average.

2. Departmental GOPPAR:

   Calculate GOPPAR for individual departments (rooms, F&B, etc.) to identify which areas are most and least profitable.

3. GOPPAR Flow-Through:

   Measure how much of each additional dollar of revenue flows to GOP. High flow-through indicates efficient operations.

4. Segment-Specific GOPPAR:

   Calculate GOPPAR by customer segment (leisure, corporate, group) to identify your most profitable guests.

5. GOPPAR by Distribution Channel:

   Analyze which booking channels (direct, OTA, corporate) generate the highest GOPPAR after accounting for acquisition costs.

Academic Research:

A study by the Cornell University School of Hotel Administration found that hotels focusing on GOPPAR improvement rather than just RevPAR growth achieved 2.3x higher profitability increases over a 5-year period.

GOPPAR in Hotel Valuation

GOPPAR plays a crucial role in hotel valuation and investment decisions:

• Capitalization Rates:

  Investors often use GOPPAR to determine appropriate cap rates for hotel acquisitions. Higher GOPPAR typically commands lower cap rates.

• Loan Underwriting:

  Lenders use GOPPAR to assess a hotel’s ability to service debt. Most lenders require a minimum GOPPAR coverage ratio.

• Asset Management:

  Hotel owners use GOPPAR trends to decide when to renovate, rebrand, or reposition a property.

• Market Comparisons:

  GOPPAR allows for more accurate comparisons between hotels of different sizes and configurations than metrics like total profit.

The HVS Global Hospitality Services reports that GOPPAR has become the standard metric for hotel valuations in North America and Europe, replacing older metrics like revenue multiples.

Technology Tools for GOPPAR Tracking

Several hotel technology solutions can help track and improve GOPPAR:

• Property Management Systems (PMS):

  Modern PMS platforms like Opera or Cloudbeds can automatically calculate GOPPAR from integrated financial data.

• Business Intelligence Tools:

  Solutions like Duetto, IDeaS, or OTA Insight provide GOPPAR forecasting and benchmarking capabilities.

• Revenue Management Systems:

  Advanced RMS tools can optimize pricing to maximize GOPPAR rather than just RevPAR.

• Expense Management Software:

  Platforms like BirchStreet or Fourth help control costs to improve the “profit” side of GOPPAR.

Future Trends in GOPPAR Analysis

The hotel industry is evolving in how it uses GOPPAR:

• Real-Time GOPPAR:

  With integrated systems, hotels can now track GOPPAR in real-time rather than waiting for monthly reports.

• Predictive GOPPAR:

  AI-powered tools can forecast GOPPAR based on booking pace, market conditions, and historical patterns.

• Sustainability GOPPAR:

  New metrics are emerging that adjust GOPPAR for sustainability costs and benefits.

• Total Profitability Metrics:

  Some analysts are developing metrics that combine GOPPAR with non-operating income for a complete profitability picture.

Conclusion: Making GOPPAR Work for Your Hotel

GOPPAR is more than just another hotel metric—it’s a comprehensive measure of your property’s financial health and operational efficiency. By focusing on GOPPAR rather than just revenue metrics like RevPAR or ADR, hotel owners and managers can:

• Make more informed pricing decisions
• Identify true profit drivers in their business
• Benchmark performance more accurately against competitors
• Make data-driven decisions about cost control and revenue generation
• Present more compelling financials to investors and lenders

Start tracking GOPPAR regularly—monthly at minimum—and use it as your primary financial performance indicator. The hotels that master GOPPAR optimization will be the ones that thrive in today’s competitive hospitality landscape.

Use the calculator above to determine your current GOPPAR and identify opportunities for improvement. For more advanced analysis, consider working with a hotel financial consultant who can help you develop strategies to maximize this critical metric.