Key Takeaways

• GOPPAR (Gross Operating Profit Per Available Room) is the most comprehensive metric for measuring a hotel's true profitability, going beyond RevPAR by accounting for operating costs.
• It is calculated by dividing Gross Operating Profit (GOP) by the Total Available Rooms, with GOP being total revenue minus operating expenses.
• Key cost categories impacting GOP include staff (30-45%), energy (8-15%), F&B (25-35% of F&B revenue), marketing (10-20%), and maintenance (3-6%).
• Strategies to improve GOPPAR involve strengthening revenue streams through dynamic pricing and direct bookings, and optimizing costs via efficient staffing, smart energy management, and procurement.
• Benchmarking GOPPAR against historical data, competitor sets (CompSet), and industry averages is crucial for informed strategic decision-making and identifying areas for improvement.

What is GOPPAR? Measure Your Hotel's True Profitability

In the hotel industry, metrics like occupancy rate and RevPAR are frequently tracked. However, these metrics alone do not reflect a hotel's true profitability. GOPPAR (Gross Operating Profit Per Available Room) is the gold standard metric that reveals a hotel's true performance by accounting for costs beyond just revenue.

GOPPAR Definition and Calculation Formula

GOPPAR measures the gross operating profit per available room. Its formula is quite simple:

GOPPAR = Gross Operating Profit (GOP) / Total Available Rooms

Here, GOP is obtained by deducting operating expenses (staff, energy, food & beverage costs, marketing, maintenance) from total revenue. Fixed asset depreciation and financing expenses are generally not included.

Embed this image on your site

<a href="https://otelciro.com/en/news/goppar-maximize-hotel-profitability-beyond-revpar-strategy-guide"> <img src="https://cdn.sanity.io/images/1la98t0z/production/55fdd76e2edd1933e8d4f438df35f4a8b4556534-1200x670.png" alt="GOPPAR Calculation Infographic" width="800" /> </a> <p>Source: <a href="https://otelciro.com">OtelCiro</a> — AI Hotel Revenue Management</p>

Related reading: How Many Hours Does Your Hotel Run Empty Annually? The True Cost of a Vacant Room

Related reading: Dynamic vs. Static Pricing: Maximize Your Profits with the Taylor Swift Effect

RevPAR vs. GOPPAR: Key Differences

The difference between RevPAR and GOPPAR is critical:

Why RevPAR Isn't Enough

A hotel might operate at 95% occupancy and show high RevPAR, but could actually be losing money due to excessive staff costs, high OTA commissions, and energy expenses. GOPPAR eliminates this illusion.

Example: Comparison of two hotels:

• Hotel A: RevPAR 800 TL, GOPPAR 280 TL (high-cost operation)
• Hotel B: RevPAR 650 TL, GOPPAR 320 TL (efficient operation)

Hotel B is more profitable despite lower revenue. This table clearly demonstrates why GOPPAR is indispensable for strategic decision-making.

Embed this image on your site

<a href="https://otelciro.com/en/news/goppar-maximize-hotel-profitability-beyond-revpar-strategy-guide"> <img src="https://cdn.sanity.io/images/1la98t0z/production/babd172d5d4e9762f3e1ec208c24dd03a431041a-1200x670.png" alt="Segment-based hotel pricing strategy" width="800" /> </a> <p>Source: <a href="https://otelciro.com">OtelCiro</a> — AI Hotel Revenue Management</p>

Cost Items: Factors Affecting GOP

The primary cost items that determine a hotel's gross operating profit are:

Staff Expenses (30-45%)

This is the largest item in a hotel's budget. It can be optimized through efficient shift scheduling and automation.

Energy and Infrastructure (8-15%)

Heating, cooling, lighting, and water expenses. Savings can be achieved with smart building management systems.

Food & Beverage Costs (25-35% of F&B revenue)

Raw material waste, menu pricing, and supply chain management directly impact this item.

Marketing and Distribution (10-20%)

OTA commissions, digital advertising expenditures, and CRM costs. Distribution costs can be reduced through channel management optimization.

Maintenance and Repairs (3-6%)

Preventive maintenance programs significantly reduce emergency repair costs.

Related reading: Dynamic Pricing and AI: The Complete Guide to Hotel Price Optimization with Artificial Intelligence

Related reading: 65% of Travelers Accept Dynamic Pricing: Transparency Builds Trust

GOPPAR Improvement Strategies

1. Strengthen the Revenue Side

• Dynamic pricing: Implement demand-based automatic price adjustments using an AI-powered pricing engine
• Ancillary revenue streams: Increase non-room revenue items such as spa, restaurant, and meeting rooms
• Increase direct channel share: Save on OTA commissions to boost net revenue

2. Optimize the Cost Side

• Staff efficiency: Reduce overtime costs with demand-forecasting-based shift scheduling
• Energy management: Reduce energy consumption by 15-25% with IoT sensors and smart systems
• Procurement optimization: Control F&B costs through bulk purchase agreements and inventory management

3. Achieve Efficiency Through Technology

Smart PMS systems automate operational processes, reducing error rates and increasing staff efficiency. Processes such as check-in/check-out automation, housekeeping planning, and revenue reporting can be managed through a single platform.

Embed this image on your site

<a href="https://otelciro.com/en/news/goppar-maximize-hotel-profitability-beyond-revpar-strategy-guide"> <img src="https://cdn.sanity.io/images/1la98t0z/production/c0edb393f0dd45ca1363f938dbc43e2d65427273-1200x670.png" alt="TRevPAR total revenue management calculation" width="800" /> </a> <p>Source: <a href="https://otelciro.com">OtelCiro</a> — AI Hotel Revenue Management</p>

GOPPAR Benchmarking: How to Compare Yourself

To make your GOPPAR meaningful, you need the right benchmarks:

• Annual trend: Track the development of your own GOPPAR over the years
• CompSet comparison: Compare your GOPPAR performance against hotels in your competitive set
• Industry average: Check regional averages from STR or similar data sources
• Department-based: Analyze each department's contribution to GOP individually

With advanced reporting tools, it is possible to visualize your GOPPAR trends and perform department-based profitability analyses.

Related reading: What is Dynamic Pricing? 5 Ways to Increase Your Hotel Revenue

GOPPAR Calculation Example

Monthly GOPPAR calculation for a 100-room city hotel:

Conclusion

GOPPAR is the most comprehensive metric for measuring your hotel's true profitability performance. Instead of focusing solely on revenue, optimizing your cost structure to increase your GOPPAR is key to sustainable growth. With AI-powered revenue management and smart operational solutions, you can simultaneously optimize both revenue and cost sides to maximize your profitability.