What is GOPPAR? How can it benefit your hotels?
 What is GOPPAR? How can it benefit your hotels?
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What is GOPPAR?
One of the hospitality industry’s key bottom-line metrics, gross operating profit per available room measures the relationship between hotel revenues and expenses. In general, the better you understand GOPPAR, the better you will be at turning revenue into profit. That is why it is important to benchmark your GOPPAR, along with the other key P&L metrics, on a consistent basis.
When looking at the big picture, profitability benchmarking gives your commercial teams visibility over their operating and labor costs relative to revenues, as well as the conversion of revenues to profits given an occupancy or ADR-driven strategy.
Key P&L metrics:
- Gross Operating Profit Per Available Room (GOPPAR)
- Total revenue per available room (TrevPAR)
- Earnings before interest, tax, depreciation, and amortization (EBITDA)
- Labor costs per available room (LPAR)
Gross operating profit (GOP) or GOPPAR work in conjunction with TRevPAR to determine flow through, which calculates the percentage of incremental revenue that results in incremental profit.
GOPPAR formula
Because of its lengthy acronym, the metric might seem complicated. However, calculating GOPPAR is quite simple.
Gross operating profit (GOP) or GOPPAR work in conjunction with TRevPAR to determine flow through, which calculates the percentage of incremental revenue that results in incremental profit.
What is GOPPAR? How can it benefit your hotels?
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Gross Operating Profit = total revenue – (total departmental expenses + total undistributed expenses)
Total departmental expenses =
Rooms expense + Food and Beverage expenses + other operated department expenses
Total undistributed expenses =
Administrative & General + Information & Telecommunication Systems + Sales and Marketing + Utilities + Property Operations and Maintenance
How to use GOPPAR?
Analyzing GOPPAR highlights how effectively you are converting revenues across all departments into profit. While you might outperform your competitors or market in the top-line indicators (occupancy, ADR, RevPAR), there could be areas in which you are operating with higher expenses that are pressuring your bottom line.
Off-season periods are a simple example, as GOPPAR can tell you how well you are converting profit at a time with less demand. Perhaps you are attracting more demand and a competitive rate when looking at the market, but at the same time, you are not generating the same level of profits. Chances are your expenses are higher than needed. Maybe you employ too much staff at certain times? Managing labor costs is critical to profitability, and your GOPPAR will indicate if you are managing it well.
A key piece of benchmarking, GOPPAR can be used across entire enterprises. Some high-level examples include:
- Revenue Managers – Use GOPPAR to optimize revenues and expenses, and ultimately, convert revenue to profit.
- General Managers – Analyze income and expense comparisons against competitive sets and market averages.
- Finance Teams – Index GOPPAR to understand income and expense variables against the competition. Monitor operating patterns and maximize profit for each hotel and the portfolio as a whole. Work collectively with development teams to demonstrate returns to prospective franchisees.
Overall, with a better grasp on how your revenue and expense balance compares, you can identify strengths, weaknesses and opportunities to make your hotels or particular departments more profitable.
About CoStar Group, Inc.
CoStar Group (NASDAQ: CSGP) is a leading provider of online real estate marketplaces, information, and analytics in the property markets. Founded in 1987, CoStar Group conducts expansive, ongoing research to produce and maintain the largest and most comprehensive database of real estate information. CoStar is the global leader in commercial real estate information, analytics, and news, enabling clients to analyze, interpret and gain unmatched insight on property values, market conditions and availabilities. Apartments.com is the leading online marketplace for renters seeking great apartment homes, providing property managers and owners a proven platform for marketing their properties. LoopNet is the most heavily trafficked online commercial real estate marketplace with thirteen million average monthly global unique visitors. STR provides premium data benchmarking, analytics, and marketplace insights for the global hospitality industry. Ten-X offers a leading platform for conducting commercial real estate online auctions and negotiated bids. Homes.com is the fastest growing online residential marketplace that connects agents, buyers, and sellers. OnTheMarket is a leading residential property portal in the United Kingdom. BureauxLocaux is one of the largest specialized property portals for buying and leasing commercial real estate in France. Business Immo is France's leading commercial real estate news service. Thomas Daily is Germany's largest online data pool in the real estate industry. Belbex is the premier source of commercial space available to let and for sale in Spain. CoStar Group's websites attracted over 163 million average monthly unique visitors in the third quarter of 2024. Headquartered in Washington, DC, CoStar Group maintains offices throughout the U.S., Europe, Canada, and Asia. From time to time, we plan to utilize our corporate website, CoStarGroup.com, as a channel of distribution for material company information. For more information, visit CoStarGroup.com.
This news release includes "forward-looking statements" including, without limitation, statements regarding CoStar's expectations or beliefs regarding the future. These statements are based upon current beliefs and are subject to many risks and uncertainties that could cause actual results to differ materially from these statements. The following factors, among others, could cause or contribute to such differences: the risk that future media events will not sustain an increase in future occupancy rates. More information about potential factors that could cause results to differ materially from those anticipated in the forward-looking statements include, but are not limited to, those stated in CoStar's filings from time to time with the Securities and Exchange Commission, including in CoStar's Annual Report on Form 10-K for the year ended December 31, 2023 and Forms 10-Q for the quarterly periods ended March 31, 2024, June 30, 2024, and September 30, 2023, each of which is filed with the SEC, including in the "Risk Factors" section of those filings, as well as CoStar's other filings with the SEC available at the SEC's website (www.sec.gov). All forward-looking statements are based on information available to CoStar on the date hereof, and CoStar assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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