GOPPAR Calculator – Gross Operating Profit Per Available Room

GOPPAR (Gross Operating Profit Per Available Room)

If you’re looking to measure the financial performance of your hotel, there are several metrics you can use. One of the best ones is GOPPAR, a metric that tracks how efficiently your hotel can convert its revenues into profits throughout all its available rooms. The acronym stands for Gross Operating Profit Per Available Room and it’s vital for your hospitality business. Here’s learning a little more about it below.

How You Can Calculate GOPPAR

There is a standard formula you can use to calculate GOPPAR. This is the following:

Gross Operating Profit/Total Available Rooms

Don’t forget that your gross operating profit means your total hotel revenues after deducting all your operating expenditure, such as taxes, interest, amortization, and depreciation. You can then divide this profit by the number of rooms that are available over the period that you’re analyzing.

So, if your hotel has 100 rooms available for a 30-day period, then you will have 3,000 room nights to use in the calculation. Now, let’s assume that your gross operating profit is $300,000 for this duration. The GOPPAR in this case will be $300,000/3,000 = $100. It will show you the profit that you are generating per room, irrespective of whether the room has been sold or not.

Why GOPPAR Matters

GOPPAR has a lot of importance if you’re in the hospitality business. Here’s why:

• GOPPAR covers all your sources of revenue, including rooms, spa, food and beverages and other services, unlike RevPAR. It also deducts the operating expenses.
• GOPPAR is thus an extensive metric of your profitability, giving you helpful insights into cost control and your top-line performance.
• Regularly tracking GOPPAR will help you evaluate operational efficiencies better, compare properties, and make smarter business decisions accordingly.
• GOPPAR shows you the profit that’s retained after you’re covering your operating costs. It is thus vital for investors, owners, finance teams, etc. who require a better picture of the financial health of any property.
• RevPAR and ADR both neglect the costs and that’s where GOPPAR ushers in cost management, helping you find whether the higher revenue is actually leading to good bottom-line growth for your property.
• It also helps you highlight any operational inefficiency that may be hindering overall profitability.

How You Can Boost Your Hotel’s GOPPAR

Here are some ways in which you can boost your hotel’s GOPPAR.

Scale up your average room rate- Increasing the average room rate with dynamic pricing and by providing premium room options is a good way to enhance the GOPPAR. Increase the occupancy rate- If you wish to enhance the GOPPAR of your hotel, try to increase the occupancy rates. It will unlock higher revenues and eventually more profits. Special discounts, promotions, packages and better marketing are the solutions in this case. Keep the quality focus intact- Always invest in good quality throughout your property, be it the amenities, staff members, technology, furnishings, and everything else. Enhancing quality and customer service can help you increase GOPPAR significantly. The higher your quality, the more your average room rate. Cut your costs- Improving the GOPPAR needs you to strive to cut costs. This is possible if you streamline your operations and lower any unnecessary expenses. Boost ancillary revenue streams- Provide enticing promotions and packages for spa treatments, room service, and other add-ons. It will help you enhance your ancillary revenues, while improving GOPPAR considerably in the bargain.

These are some ways in which you can enhance your hotel’s GOPPAR. The importance of this metric is undisputable when it comes to evaluating your hotel’s overall profitability.