What does GOP mean in the hotel industry?
GOP (gross operating profit) is a hotel's total revenue minus its operating expenses: the profit the hotel earns from running its rooms, restaurants, spa and other departments. It is measured before management fees, rent, insurance, interest, taxes, depreciation and amortisation, which is why owners and general managers use it to judge how well the hotel itself is run.
What is GOP in a hotel?
In the context of a hotel, GOP reflects how well the management controls costs while maximising revenue. It is a key performance indicator (KPI) that gives insight into the hotel's operational health and overall financial performance.
What is meant by GOP?
GOP is the gross profit a hotel makes from its core operations. In the USALI format (the Uniform System of Accounts for the Lodging Industry) that most hotels report in, it is total revenue minus the direct costs of each department (rooms, F&B, spa: payroll, cost of sales, commissions) and minus the undistributed operating expenses (administration, sales and marketing, maintenance, energy). This metric helps hotel operators understand how well they are managing their resources and gives a basis for strategic decisions to improve profitability.
How do you calculate the GOP percentage for hotels?
The GOP percentage, or GOP margin, is calculated by dividing the gross operating profit by the total revenue and multiplying the result by 100. The formula is as follows:
GOP percentage = (gross operating profit / total revenue) x 100
For example, a hotel with €500,000 of revenue in a month and €330,000 of operating expenses has a GOP of €170,000 and a GOP margin of 34%. This percentage shows how much of the hotel's revenue is kept as profit after covering all operating expenses. It is a useful metric for comparing the performance of different hotels or tracking a single hotel's performance over time.
What is a good GOP for a hotel?
A "good" GOP percentage varies depending on the type of hotel, its location and the market segment it serves. As a rough guide:
• Luxury hotels: 35% to 45%
• Upscale hotels: 30% to 40%
• Midscale hotels: 25% to 35%
• Economy hotels: 20% to 30%
These percentages reflect a healthy balance between revenue generation and cost control, indicating effective management practices. Limited-service hotels without restaurants often reach higher margins than full-service resorts, because F&B and spa carry high payroll and cost of sales.
How upselling before arrival adds to GOP
Not every euro of revenue adds the same amount to GOP. A room upgrade sold into a better room that would otherwise stay empty costs the hotel very little, so most of it flows straight to gross operating profit. A spa treatment or a dinner booked in advance also helps, because the team can plan staff and stock around it instead of reacting on the day.
The easiest moment to sell these extras is before arrival, when guests are planning their stay. With guest journey automation, a WhatsApp message goes out from the booking in your PMS a few days before arrival, with buttons for a room upgrade, breakfast or a treatment; the guest replies in the same chat and the team confirms. Hotel Enzian Obertauern sends its restaurants and weekly programme this way and saw 38% more restaurant reservations from its WhatsApp campaigns. See how revenue teams use chatlyn to grow revenue per guest, not only per room.
For the metric that puts GOP per room, read our comparison of GOP vs GOPPAR in the hotel industry.
Key terms of gross operating profit for hotels (GOP)
GOP hotel meaning
Gross operating profit (GOP) is a measure of a hotel's profitability after operating expenses are deducted from total revenue.
GOP hotel calculation
GOP is calculated by subtracting total operating expenses (departmental and undistributed) from total revenue.
GOP hotel definition
GOP represents the profit a hotel makes from its core operations, excluding fees, fixed charges and non-operating expenses like taxes and interest.
GOP hotel formula
The formula for calculating GOP is: GOP = total revenue - total operating expenses.
GOP hotel revenue
This refers to the total income generated by the hotel from all its operations before deducting operating expenses.
GOP hotel industry
GOP is a standard metric used across the hotel industry to gauge financial performance and operational efficiency.
GOP hotel KPI
GOP is a key performance indicator (KPI) in the hotel industry, crucial for assessing a hotel's financial health.
FAQs
What is the difference between GOP and GOPPAR?
GOP is the total profit in euros; GOPPAR (gross operating profit per available room) divides it by the number of available rooms, so hotels of different sizes can be compared.
What is the difference between GOP and EBITDA?
GOP comes first. EBITDA is GOP minus management fees and fixed charges such as rent, property tax and insurance, so it is always lower than GOP.
What is the difference between GOP and NOI?
Net operating income (NOI) goes further down the profit and loss statement: it also subtracts management fees, fixed charges and usually a reserve for replacing furniture and equipment. Owners and investors look at NOI; operators are usually measured on GOP.
