RevPAR vs GOPPAR — why can one rise while the other falls?

The worked example

Two hotels each grow RevPAR by 10%. The first did it on rate: same guests, higher price. Almost all of that increase reaches profit, because an occupied room that costs more does not cost more to clean.

The second did it on occupancy: more rooms sold, at the same price, many of them through an online travel agent. Every one of those rooms brings a housekeeping cost, a laundry cost, an amenity cost, and a commission of 15–25%. A meaningful share of the extra revenue never reaches the profit line at all.

The board sees two identical headlines. The asset values are moving in different directions.

What each metric is actually for

RevPAR is the rooms topline: revenue per available room. It ignores every expense and all non-rooms revenue. It is not a bad metric — it is a metric answering one narrow question, which becomes a bad metric the moment it is asked a different one.

TRevPAR captures total revenue per available room, including food, beverage and everything else. GOPPAR captures gross operating profit per available room — what the operation actually earned. It is the closest single proxy for what the asset is worth, which is why it is the one an owner should celebrate.

The general lesson, which is not about hotels

Every industry has a topline metric it celebrates and a contribution metric it should. Revenue that costs more than it earns looks identical, at the top of the page, to revenue that does not.

A reporting pack built around a single headline number is not a simplification. It is a pack designed, structurally, to mislead the people who trust it — and it will do so most convincingly in the months when the difference matters most.

Terms

• GOPPAR (Gross Operating Profit Per Available Room)
• RevPAR (Revenue Per Available Room)
• TRevPAR (Total Revenue Per Available Room)