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GMROI (Gross Margin Return on Investment)

This is a metric that measures the return on investment generated by a hotel, expressed as a percentage.

It is calculated by dividing the gross margin by the total investment in the hotel.

What is GMROI (Gross Margin Return on Investment), and how is it calculated in the hospitality industry?

GMROI is a financial metric used in the hospitality industry to assess the profitability of inventory investments. It measures the relationship between the gross margin earned from sales and the investment in inventory. GMROI is calculated by dividing the gross margin by the average inventory cost. A higher GMROI indicates that a hotel is effectively generating profits from its inventory investments.

Why is GMROI important for hotels?

GMROI is important for hotels because it helps them evaluate the profitability and efficiency of their inventory management practices. By monitoring GMROI regularly, hotels can identify underperforming products, optimize inventory levels, and allocate resources effectively to maximize profitability. GMROI also guides strategic decisions related to pricing, purchasing, and inventory management, ultimately contributing to improved financial performance and competitiveness.

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