So, you’re working on your revenue management strategy and like any business tactic you need a way to measure its results. With revenue management, there are typically two ways to gauge its performance: RevPAR and GOPPAR.
RevPAR = Revenue Per Available Room
GOPPAR = Gross Operating Profit Per Available Room
To calculate RevPAR, multiply your ADR by your occupancy percentage.
To calculate GOPPAR, take the GOP and divide it by the number of available rooms at your property.
Is one better than the other? It depends on your property, how different your rooms are, and what kind of picture you want to paint with your revenue or profit.
RevPAR provides insight on the revenue generated from the number of rooms being sold.
GOPPAR provides more insight on both your revenue per room as well as operational costs to create this revenue which is a better picture of your bottom line.
Most revenue managers focus on RevPAR but nowadays you’ll find they may be using both metrics to evaluate the strategy’s performance. Again, it’s dependent on your property, its rates, and what metric is most tangible for you to correctly price your property. Maximizing profit might work for high-end, luxury hotels whereas budget-friendly, value-driven hotels might need to be more flexible in their rates depending on occupancy.