GOPPAR: gross operating profit per available room, and how to work it out

1. 1Choose the period, usually a month.
2. 2Work out the gross operating profit for it: total revenue, less the departments' costs, less the costs of running the whole hotel. The page on gross operating profit sets out each line.
3. 3Count the rooms available: your rooms multiplied by the nights in the period, the same count you use for RevPAR.
4. 4Divide the gross operating profit by the rooms available. The answer is in rupees: what each room you had left as operating profit, on average, on each night.

The calculator on this page opens on the same month. Put in your own gross operating profit and rooms available to see yours.

RevPAR counts room revenue only and says nothing about what it cost to earn. EHL Hospitality Business School points out that RevPAR leaves out food and drink, the spa and events, says nothing about operating costs, and can rise with discounts that hurt profit. GOPPAR takes all of that in.

RevPAR said the second month was better. GOPPAR says it was worse, and GOPPAR is the one the bank account agrees with.

• Use the same gross operating profit line every month: after the departments' costs and the hotel's running costs, before rent, property tax, insurance, loan interest and depreciation.
• Count rooms available the same way as for RevPAR: every room you could have sold, booked or empty.
• If a room is closed for a long renovation, leave it out of both RevPAR and GOPPAR or keep it in both, and say which.
• Compare months of different lengths by GOPPAR, not by GOP: a 31-night month has more rooms to sell than a 30-night one.
• When you compare with another hotel, ask whether its profit counts the same costs as yours. An owner paid a salary through the hotel and one who isn't can run the same hotel to very different figures.

• What the owner keeps. Rent, loan interest, depreciation and income tax come after it.
• Where the profit came from. Read each department's own profit to see whether the rooms or the restaurant carried the month.
• Which nights made the money. A month's figure hides nights sold out at an ordinary price.
• How you stand against the hotels around you. Their profit is private, so most hotels compare their prices and rooms sold instead, through the rate and occupancy indexes.

• Raise the price on the nights your town is busy. A higher price for the same room costs little more to deliver, apart from commission, so most of it reaches GOPPAR.
• Move bookings from the booking sites to your own website, where no site takes a commission.
• Don't buy occupancy with discounts that fill rooms at a loss. Count what each extra room costs to clean, light and staff before you cut the price.
• Staff each shift by the rooms already sold for the coming nights.
• Price the restaurant, banquets and extras so that each earns a profit of its own, not only revenue.