Goppar, beyond Revpar
What is GOPPAR?
Running a hotel successfully can be tough. It requires the perfect application of financial and customer service strategies. While customer service can be learned through training, revenue management is something worthwhile. There are several aspects associated with implementing a successful revenue management strategy for your hotel. These aspects revolve around the right use of certain Key Performance Indicators (KPIs).
GOPPAR is one of the most widely acknowledged KPI used to understand the way things work in terms of revenue. Other than this, RevPar is another indicator which is frequently used in the hospitality industry. Both these are used to indicate the possible loopholes that are taking place in the overall management of the hotel.
The acronym GOPPAR stands for Gross Operating Profit Per Available Room. It tells the owners about the value of their asset as it gives a bigger picture of the financial situation of the hotel. This KPI indicates the total performance of the hotel and helps in making adjustments to increase bookings.
GOPPAR revolves around the number of rooms in your hotel rather than the number you’ve sold. Similarly, this indicator looks at the overall revenue generated by the hotel as it doesn’t look at them individually. That’s why; we use hotel GOPPAR indicator for understanding the overall performance of your hotel.
The formula used to calculate GOPPAR is:
GOPPAR= Gross Operating Profit / Available Rooms
Continuous monitoring of this indicator will help you identify trends and true performance of your hotel. It can be calculated on a daily basis or at the end of each year by dividing total profit earned by in the year divided by the number of rooms in the hotel available for booking.
Further calculation of GOPPAR can be understood by looking at the table below. For a better understanding of the way it works, we will segregate the table into four sections. The basic hotel data, Revenues generated per department, expenses, and the GOPPAR indicator.
|Hotel Basic Data|
|Total Days in Business year||365|
|Total number of rooms available per year||47,450|
It is important to note that the GOPPAR takes into account every room available for the total year.
|Revenues Per Department|
|Food and beverages||1,000,000|
We also have to calculate the total revenue generated from each department.
|Expenses Per Department|
|Food and beverages||650,000|
|Gross Profit (GOP) of Hotel|
|Gross Operating Profit (GOP)||2,490,000|
Once we have the GOP value, all you need to do is to divide it to the number of available rooms per year.
Other Useful Indicators
Other than the GOPPAR, the hospitality industry often uses RevPar and ADR to calculate the financial performance of their hotel or resorts.
Both the above-mentioned KPIs utilize the data for each room and don’t take revenue generated from bars and restaurants into account. This further cements the position of GOPPAR as the best tool for calculating the overall performance of your hotel.