When coming with compare between Revenue per available room(REVPAR) and Gross operating profit per available room(GOPPAR) most of the Revenue management Professionals often get into debate. It is also been mentioned that GOPPAR cannot exist without REVPAR, and it presents a more holistic view of a hotel’s performance. The advantages of GOPPAR and some pitfalls of REVPAR as vice-versa or as a metric have been Highlighted on many occasions. Fact is about 50 percent of the service hotel’s revenue generate from room rates. If the property has numerous ancillary revenues, then GOPPAR will show many things that are not seen when utilizing REVPAR. There are many differences in how GOPPAR is calculated as a yielding metric versus an accounting metric.
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A fact comes out, GOPPAR has a greater and more reliable correlation with a hotels value then REVPAR i.e,. GOPPAR has a direct correlation of between 85 percent and 90 percent with a hotel’s value. It is Defined as total Gross operating Profit (GOP) per available room per day, where GOP is totally equal to revenue less the total departmental and operating expenses. Since GOPPAR is the Operating Profit of a hotel: it provides a safety and clean indication of overall performance or cash flow potentials of the hotelproperty. GOPPAR is the only thing that accounts all the hotels operating expenses, most of which include both fixed variable portions. The fixed portion is mainly associated with the size and requirements of a hote, GOPPAR provides an excellent performance measurements for hotels, regardless of size. When higher REVPAR gives more benefit in a smaller hotels (because it is more effective in optimising occupancy and room rate), its operating expenses per room are likely to be higher than those of a larger property. It is noted that GOPPAR is highly sensitive to any fluctuation in REVPAR. Anon,
A fact comes out, GOPPAR has a greater and more reliable correlation with a hotels value then REVPAR i.e,. GOPPAR has a direct correlation of between 85 percent and 90 percent with a hotel’s value. It is Defined as total Gross operating Profit (GOP) per available room per day, where GOP is totally equal to revenue less the total departmental and operating expenses. Since GOPPAR is the Operating Profit of a hotel: it provides a safety and clean indication of overall performance or cash flow potentials of the hotelproperty. GOPPAR is the only thing that accounts all the hotels operating expenses, most of which include both fixed variable portions. The fixed portion is mainly associated with the size and requirements of a hote, GOPPAR provides an excellent performance measurements for hotels, regardless of size. When higher REVPAR gives more benefit in a smaller hotels (because it is more effective in optimising occupancy and room rate), its operating expenses per room are likely to be higher than those of a larger property. It is noted that GOPPAR is highly sensitive to any fluctuation in REVPAR. Anon,