The Metric Every Hotel Investor Should Revisit This Year
For years, hotel performance conversations have revolved around one familiar metric: RevPAR.
Revenue per available room has long been treated as the gold standard for evaluating hotel success. It’s easy to calculate, easy to compare, and easy to headline. But in today’s operating environment, marked by rising labor costs, higher insurance premiums, persistent supply-chain volatility, and uneven demand recovery, RevPAR alone no longer tells the full story.
The metric hotel investors should be revisiting this year is GOPPAR.
Gross operating profit per available room is not new, but it is newly essential.
What Is GOPPAR?
GOPPAR measures how much profit a hotel generates per available room after operating expenses but before fixed costs like debt service and ownership-level expenses.
Formula: Gross Operating Profit ÷ Available Rooms
Unlike RevPAR, which only captures topline revenue, GOPPAR reflects operational efficiency, cost discipline, and management effectiveness; the levers that matter most in today’s margin-driven environment.
Why RevPAR Is No Longer Enough
RevPAR answers one question:
How well is the hotel selling rooms?
It does not answer:
How much it costs to operate those rooms
Whether higher revenue is being offset by labor or utility expenses
If rate growth is actually translating into profitability
In many markets, hotels are reporting flat or rising RevPAR while margins quietly compress. Staffing challenges, wage inflation, and brand-mandated expenses can erase revenue gains faster than investors expect.
GOPPAR exposes those realities.
Why GOPPAR Matters More in Today’s Market
1. Costs Are the New Variable
Labor is no longer a flexible line item. Insurance costs have surged. Utilities remain volatile. GOPPAR forces investors to look at how well operators adapt to these pressures instead of masking them with rate growth.
2. Operational Skill Creates Differentiation
Two hotels with identical RevPAR can produce dramatically different profits. GOPPAR highlights which operators are executing well — and which ones are relying on market tailwinds rather than discipline.
3. It Aligns With Value-Creation Strategies
For investors focused on renovations, rebranding, or operational turnaround strategies, GOPPAR is often the clearest early indicator that changes are working. Margin improvement typically shows up in GOPPAR before it appears in NOI.
4. It Improves Asset-Level Decision-Making
GOPPAR helps investors evaluate:
Staffing models
Outsourcing vs. in-house services
Technology investments
Brand compliance costs
These decisions drive long-term returns but rarely move RevPAR.
GOPPAR vs. NOI: What’s the Difference?
NOI remains critical at the ownership level, but it includes factors that are often outside the operator’s control, such as debt structure or ownership expenses.
GOPPAR isolates operational performance, making it especially valuable for:
Comparing properties across a portfolio
Evaluating third-party managers
Underwriting acquisitions where operations will change post-close
Think of GOPPAR as the clearest view into how the hotel actually runs.
When Investors Should Pay Extra Attention to GOPPAR
GOPPAR becomes especially important when:
Evaluating underperforming or transitional assets
Assessing post-renovation or post-PIP performance
Comparing third-party management proposals
Underwriting select-service hotels where margins drive returns
In select-service and limited-service assets, where food-and-beverage exposure is lower and operational efficiency matters more, GOPPAR often tells the most honest story.
Frequently Asked Questions
What is the most important hotel performance metric for investors today?
GOPPAR is increasingly viewed as one of the most important metrics because it reflects both revenue and operating efficiency.
Why is GOPPAR better than RevPAR?
RevPAR measures revenue only. GOPPAR shows profitability after operating expenses, offering a more complete picture of financial performance.
Is GOPPAR used in hotel underwriting?
Yes. Institutional investors and operators frequently use GOPPAR to evaluate operational performance, especially in turnaround or value-add strategies.
Does GOPPAR replace NOI?
No. GOPPAR complements NOI by isolating operational performance, while NOI reflects ownership-level results.
The Bottom Line
RevPAR still matters. But it should no longer be the headline metric driving investor decisions.
In a market where margins are under pressure and operational execution separates strong assets from average ones, GOPPAR provides clarity that topline metrics cannot.
For hotel investors focused on durable returns, disciplined operations, and long-term value creation, this is the year to bring GOPPAR back to the center of the conversation.
Sources
CBRE Hotels Research: U.S. Hotel Profitability Trends
STR: Hotel Industry Glossary and Performance Metrics
JLL Hotels & Hospitality Group: Global Hotel Investment Outlook
HVS: Understanding Hotel Operating Metrics