In the hotel business, monitoring and optimizing profitability is critical to success. GOPPAR (Gross Operating Profit Per Available Room) is a vital metric that provides hotel owners, operators, and investors with insight into the financial performance and health of a property.
But what exactly is GOPPAR in hospitality and why does it matter?
Defining GOPPAR
GOPPAR represents the total gross operating profit generated per available room over a given timeframe. It is calculated by taking the hotel's total revenue minus total operating expenses, divided by the number of available rooms in the period.
In simple terms, GOPPAR reveals how much profit each occupied and vacant room has earned after accounting for the costs to run the hotel. This shows the true profitability of the property on a per room basis.
Why GOPPAR Provides Crucial Insights
Tracking GOPPAR is important for assessing hotel profitability beyond just looking at revenues. Here are some key reasons GOPPAR is an indispensable metric:
- It evaluates the ability to generate profit, not just top-line revenue. This shows the true bottom line.
- GOPPAR allows performance benchmarking against competitor hotels and industry standards.
- The data helps set realistic budgets and performance goals.
- GOPPAR measures the return on investment for hotel owners.
- Trends reveal growth opportunities and the impact of initiatives.
- It highlights areas for cost optimization.
By regularly monitoring GOPPAR, hotel managers pinpoint high and low profitability periods, optimize room rates and operational costs, and ultimately maximize financial performance.
Tips for Using GOPPAR Metrics
Below are some helpful tips for leveraging GOPPAR to get the most out of your hotel’s operations.
Tip 1 - Track GOPPAR Trends Over Time
Gain Crucial Historical Context
Analyzing GOPPAR trends over a long historical period enables hoteliers to identify profitability patterns, pinpoint growth opportunities, understand the impact of seasonal factors, and assess marketing campaign results. Having this crucial long-term perspective provides context for future goal-setting and initiatives.
Spot Trends and Opportunities
With at least 12-24 months of GOPPAR data, hotel managers can spot emerging trends, analyze the impact of revenue management changes, identify new customer segments, and determine optimal pricing for seasons and events. Doing so supports data-driven decisions.
Tip 2 - Compare Against Competitors
Understand Your Market Position
Benchmarking your hotel's GOPPAR performance against competitors provides perspective on your positioning in the market. This highlights where your GOPPAR falls short and areas where other hotels are generating higher profits per available room.
Inform Pricing and Costs Decisions
Competitive GOPPAR analysis should directly inform pricing and cost optimization strategies. If competitors are achieving higher GOPPAR through lower costs or dynamic room rates, you can determine how to follow suit.
Tip 3 - Break Down By Segment
Granular View by Segment
Separating overall GOPPAR by room type, customer segment, channel, and other factors uncovers granular insights hoteliers can leverage. A group segment may drive high occupancy but lower GOPPAR. Leisure travelers might deliver higher profits per room.
Refine Marketing and Pricing
These GOPPAR segment insights let hotels refine marketing and pricing tactics accordingly. Targeting the most profitable segments allows focusing on the highest GOPPAR opportunities. Custom packages and promotions can be tailored.
Tip 4 - Set Achievable Goals
Drive Performance
Setting realistic monthly or quarterly GOPPAR targets based on current market conditions and hotel capabilities helps drive performance by focusing staff efforts appropriately.
Foster Profit-Focused Culture
Having clear profitability goals tied to GOPPAR also fosters an organizational culture concentrated on the hotel's bottom-line versus just occupancy or revenue.
Tip 5 - Use Enabling Technology
Integrated Data Platforms
Modern hospitality tech platforms integrate data from various systems to enable accurate, real-time GOPPAR tracking and reporting. Doing so provides hoteliers with a single source of truth.
Actionable Insights
Business intelligence capabilities allow GOPPAR data analysis to uncover optimization opportunities. Hotel staff can quickly act on insights to influence GOPPAR through pricing, cost control, and marketing initiatives.
The importance of each tip centers on better understanding GOPPAR to make informed decisions that boost profitability. With the right focus on data-driven GOPPAR initiatives, hotels can excel operationally and financially.
The Role of Property Management Systems
Implementing an advanced property management system (PMS) like Booking Ninjas provides hoteliers with valuable technology to track, analyze, and optimize GOPPAR performance. Here are some of the key ways a PMS supports GOPPAR initiatives:
- Automated room allocation, dynamic pricing, and revenue management tools help maximize occupancy rates and ADR to drive higher revenue and GOPPAR.
- Centralized reporting and analytics give full visibility into GOPPAR trends and metrics in real-time.
- Integrated POS, CRM, and operational data feeds into accurate GOPPAR calculations.
- Streamlined reservations management reduces wasted rooms from overbooking and no-shows.
- Housekeeping and maintenance modules optimize labor utilization and costs.
A modern, cloud-based PMS gives access to historical and current GOPPAR data across the property and at the department level. This enables robust analysis and benchmarking. Hoteliers can set GOPPAR goals, track performance, and take strategic actions powered by data insights.
By leveraging an advanced property management system, hotels gain an integrated platform to monitor, analyze, and maximize GOPPAR through optimized revenue generation and operational efficiency.
GOPPAR is Paramount for Success
With the right focus on GOPPAR metrics and supporting technology tools, hotels can truly maximize profits, optimize costs, and outperform the competition. This single performance indicator offers tremendous visibility into the financial health and profit engine of a hotel business.
So what is GOPPAR in hospitality? It is the best metric for ensuring your hotel remains profitable.