In our latest guest post, Andrius Remeikis, Senior Business Development Manager at Profitroom, a provider of SaaS technology and hotel marketing services, looks at how hoteliers can monitor their performance using GOPPAR as a metric.
Measuring your hotel’s performance will always be an essential ingredient to success, but with the array of challenges facing the industry at present, proper measurement has never been more important. Industry metrics like GOPPAR can ensure you’re targeting and focusing on areas that really need attention and, by improving your score, you can help to ensure you’re maximising your profits.
What is GOPPAR?
Gross Operating Profit Per Available Room, or GOPPAR, is a Key Performance Indicator (KPI) that measures the relationship between your hotel’s expenses and revenue – providing a more holistic representation of its financial health, as it takes into account a multitude of different factors.
This differs from more traditional metrics such as RevPAR, which focus entirely on the relationship between a hotel’s occupancy rate and average daily room rate.
A GOPPAR score can be calculated by dividing gross operating profit (GOP) by the number of available rooms in the hotel – providing a unique reading that can be compared to previous hotel performance.
If monitored consistently, this can help hoteliers identify successes and failures year round.
Amongst the turbulence of the current hospitality climate, hoteliers are under increased strain due to the rising costs of running their businesses.
With staffing and inflation affecting the entire industry, there has never been a more important time to measure performance and data centric solutions such as GOPPAR offer a great solution.
How to improve your GOPPAR score
One fundamental way of improving your GOPPAR score is to focus on your online booking engine in an attempt to drive direct bookings.
Direct bookings yield a much lower cost of sale than business generated by intermediaries and by offering a user-friendly interface for online reservations, you unlock the potential to benefit from a more significant portion of the booking value.
Within this, you can also tailor your marketing and upsell other parts of the business – through conversion-led and easy to navigate websites.
This is a great way to further drive direct bookings and increase hotel revenue.
Marketing automation systems with unique CRM functionalities can also provide potent data-driven insights in order to drive revenue, grow guest engagement, nurture long-term relations and support your direct booking strategy.
Distributing personalised marketing material to previous and prospective guests allows you to upsell your hotel’s offering and increase revenue through different avenues such as spa facilities.
This is most effective when considered alongside GOPPAR’s ability to identify elements of the business that are restricting revenue.
Online marketing can help drive revenue in these lower performing areas to prevent them from becoming obsolete, which, in turn, will increase your overall GOPPAR score.
Including GOPPAR within your business strategy will ensure you are consistently monitoring your successes and pinpointing areas for improvement – with a retained focus on improving hotel profitability.
This aligns itself with the underlying focus of Profitroom’s technology, which is to streamline hotel processes through specialist technology solutions.
What are the benefits of using GOPPAR?
Unlinke RevPAR, this metric takes into account numeration from all aspects of your business by considering the revenue that’s generated beyond room rates, such as staffing and food and beverage costs.
This provides hoteliers with a comprehensive representation of the hotel, as by subtracting gross operating expenses from gross revenue you’re left with a much more acute understanding.
Using GOPPAR can facilitate a more reactive approach within what’s currently an ever changing hospitality climate.
Inflation, staffing issues and price rises are testing hotel margins and in many cases has called for businesses to tighten their belts.
GOPPAR has the intrinsic capability to help identify elements of the business where there is not a positive correlation between revenue and spending.
This proves particularly useful when scrutinising your business model.
This metric can also help hoteliers to highlight peaks and troughs in revenue, as well as spotting any rising expenses that wouldn’t be detected through revenue-only models.
This allows business owners to address their shortcomings and look beyond baseline revenue figures, which could paint a totally different picture.
GOPPAR is a breath of fresh air within hospitality metrics, in a time where thoroughly understanding your business is essential.
Profitroom’s software solutions can help keep this metric on track and to relieve hoteliers across the globe of the consistent pressures surrounding profits.