GOPPAR (Gross Operating Profit Per Available Room) - Best Measurement of Success
By Juston Parker President & CEO, Parker Hospitality Group, Inc. | June 15, 2010
Revenue Management continues to change rapidly. The days of "right room, right person, right price at right time" have long disappeared. So how do you really measure success at the property?
In the past General Managers looked at occupancy. "We need heads in beds to stay afloat!" was the battle cry in many a property. "If we have people staying with us, we will have paychecks to live by." There was a constant drive for pushing the guest in the door at all cost, filling the beds to capture any revenue possible. Then...GMs realized that they were possibly losing money.
"ADR, I need some more ADR!" became the new charge for properties. "I have a good asset here and its worth $X per night!" Owners and managers alike loved the ADR. Having a high ADR, or Average Daily Rate, gave you status. The property was doing well and that's all we need to know....but...
What if we look at how the two mix? "The right, room at the right price at the right time!" was the next mantra of the industry. We need RevPAR, Revenue Per Available Room, "now that will measure success"! Looking at the balance between occupancy and ADR made hotels look at how they really were performing...on the top line.
Now-a-days, the margins are getting ever closer and with more and more rooms being sold at net or wholesale rates, it's ever so important that properties look beyond the top line and see how their bottom line is effected by the decisions they make. GOPPAR, or Gross Operating Profit Per Available Room solves that need and gives a valuable look at how a property is truly performing. You can't take RevPAR to the bank, but you can take profit!
What is GOPPAR?
The Hotel Business Review articles are free to read on a weekly basis, but you must purchase a subscription to access
our library archives. We have more than 5000 best practice articles on hotel management and operations, so our
knowledge bank is an excellent investment! Subscribe today and access the articles in our archives.