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.
What is Gross Operating Profit (GOP)?
To understand GOPPAR, we first need to break down Gross Operating Profit (GOP).
Definition of 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.
Why is GOP important?
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.
Clearing up misconceptions
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.
What is GOPPAR and why does it matter?
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.
Why are hotels shifting towards GOPPAR?
- Accounts for costs
Unlike RevPAR (Revenue Per Available Room), which only focuses on revenue, GOPPAR includes operating costs, providing a reliable profitability measure. - Less dependent on occupancy
Whether your hotel operates at 70% or just 40% occupancy, GOPPAR focuses solely on profit efficiency. - Enables comparisons across properties
Because it balances revenue with costs, GOPPAR levels the playing field, enabling fair comparisons between properties, regardless of size or market.
GOPPAR formula and how to calculate it
Every successful hotelier must understand how to calculate this key performance indicator. Here is how it is done.
GOPPAR Formula
GOPPAR = {Gross Operating Profit} ÷ {Total Available Rooms}
Step-by-step GOPPAR calculation
- Calculate total revenue
Combine all revenue streams – room rates, food and beverage sales, and additional services like spa or valet. - Deduct operating expenses
Subtract all costs associated with day-to-day operations, including utilities, wages, and marketing. - Divide by total available rooms
Take the resulting Gross Operating Profit and divide it by the total number of available rooms in your hotel (not just occupied rooms).
Real-world example
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.
GOPPAR vs other metrics
To fully appreciate GOPPAR’s importance, it’s worth understanding how it compares to other popular metrics.
- RevPAR (Revenue Per Available Room)
Focuses solely on revenue generation without factoring in operational costs. RevPAR doesn’t give a clear picture of profitability. - TRevPAR (Total Revenue Per Available Room)
Includes revenue from all streams but ignores the cost of achieving that revenue – a crucial oversight. Still, TRevPAR is a solid metric to go by. - EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation)
While broader than GOP, EBITDA includes non-operational factors like debt, which makes it less actionable for day-to-day hotel management.
Why is GOPPAR essential for hotels in 2025?
The hospitality industry has experienced a paradigm shift, and profitability metrics like GOPPAR are now at the forefront.
Focus on profit, not just occupancy
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.
Navigating external challenges
Rising costs, shifting guest behaviours, and economic unpredictability make metrics like GOPPAR critical for assessing financial resilience.
Driving collaboration across departments
Revenue management, operations, and marketing must align to optimise operational efficiency – a necessity for GOPPAR improvement.
Strategies to improve GOPPAR
Want to boost your GOPPAR? These actionable strategies will put you on the right track.
- Optimise pricing and revenue management
Leverage demand forecasting and dynamic pricing to maximise revenue during peak seasons. - Lower operating costs without sacrificing quality
Introduce energy-efficient practices, streamline labour allocation, and invest in tech-driven automation tools like HiJiffy to reduce costs while enhancing service. - Maximise ancillary revenue streams
Encourage the upselling of premium services like room upgrades, spa treatments, and personalised dining experiences. - Implement flexible booking policies
Reduce cancellations and no-shows by offering dynamic pricing and flexible options that incentivise early bookings. - Automate guest communications
Use tools like HiJiffy’s AI-driven platform to handle FAQs, manage bookings, and facilitate upselling. By automating repetitive tasks, staff can focus on high-value, guest-facing initiatives.
What is a good GOPPAR for a hotel?
Understanding what constitutes a strong performance depends on various factors.
Industry benchmarks
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.
Comparative analysis
Analyse your own GOPPAR historically and against competitors to identify strengths and opportunities for improvement.
Take control of your hotel’s profitability
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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