What is GOPPAR?
GOPPAR or Gross Operating Profit per Available Room is a metric that compares hotel revenue with expenses. It benchmarks your monthly profitability as it includes all expenses incurred within the month.
In contrast to RevPAR (Revenue per Available Room) which looks at the amount we made per room for a specific time frame, GOPPAR considers the money we spend every day, week, month of the year to deliver a room to the public. It includes the money we spend on mortgages, technology, advertising, wages and so much more.
Why is GOPPAR important?
Most hotels will review their ADR (Average Daily Rate) and confirm they are increasing year on year then give themselves a pat on the back. They are doing a good job because they see an increase.
Some hotels will calculate their RevPAR and see growth. They will pat themselves on the back and give themselves a round of applause as RevPAR growth tells them they are getting the right mix of occupancy and ADR.
However, GOPAR asks business owners to compare income versus outgoings. It forces us to stop and consider what we are spending to achieve the above ADR or RevPAR growth. GOPPAR checks that we are on track to make a profit.
How to use your GOPPAR calculation?
At RevenYou, we recommend business owners calculate their GOPPAR monthly. When completing your EOM (End of Month) reporting, ensure that one line on your report looks at GOPPAR.
Once you have your number, ask yourselves some or all of the following questions:
Am I making a profit per room per day per month?
Did I see growth last month? If not, why not? Consider factors external to the hotel such as seasonal changes, cancellations and more.
Were their any unexpected expenditures? What were they and why did they occur in that month? Do I need to factor them into next years budget?
Am I moving numbers from one line to another? For example: am I reducing my commission bill but increasing my Google Ad spend?
Is my staffing right for business demands? Accommodation goes through many seasons in a year and we, as business owners, need to ensure we have enough staff on site to always surprise and delight our customers. Overstaffing can lead to a drop in profit. Understaffing can lead to a drop in review scores.
Where can I reduce costs? What am I paying for that I do not use? When did you last review the products you pay for each month to ensure they are adequate for the job you use them for? Can you reduce costs by downgrading to a cheaper or free version? Can you decrease labour costs by upgrading to a more inclusive version?
Free items, value adds, incentives, points all have a cost. Have you included these somewhere in your GOPPAR to ensure you are maintaining or increasing your profit margin.
The commentary that happens around reporting is often far more important than the numbers themselves. Anyone can produce a pretty spreadsheet full of lovely numbers but only a select few can analyse and make decisions based on what those numbers are telling you.
At RevenYou, we offer one on one mentor sessions in all aspects of running a successful hotel or motel. One of our more popular sessions is all about Jargon. The numbers and acronyms we use every day in hotels. We dig deep into understanding these, what they mean and how to use the information they provide.
