Hospitality · Operations

A hotel P&L has one line that tells you whether it is being run or just occupied.

Occupancy flatters. RevPAR is honest. GOPPAR is the one an owner should actually be paid on.

September 2026 · 7 min read

Every under-performing hotel we have looked at reported strong occupancy. Filling rooms is easy — you drop the rate until they fill. The question is what was left after.

  1. 01OccupancyRooms sold over rooms available. Tells you the building is busy. Tells you nothing about whether being busy was worth it.
  2. 02ADRAverage daily rate. Occupancy and ADR move against each other; either alone can be bought with the other.
  3. 03RevPARRevenue per available room — ADR times occupancy. The first line that cannot be gamed by discounting, because discounting shows up in it.
  4. 04TRevPARTotal revenue per available room, including food, beverage, spa, parking. Separates a hotel from a room-rental business.
  5. 05GOPPARGross operating profit per available room. What the asset actually produced before debt and ownership costs. This is the number to underwrite.
  6. 06Flow-throughOf each extra dollar of revenue, how much reached GOP. Below about 40% on incremental revenue, the operation is leaking.
Read the statement in this order. Each line answers the one above it.
Where room revenue goes before it becomes gross operating profit. The proportions vary; the order does not.

Occupancy is a vanity metric with a hospitality degree. GOPPAR is the job.

The costs that move and the costs that do not

Rooms cost is largely variable — housekeeping, linen, amenities, commissions. Undistributed cost is largely not — administration, sales, utilities, maintenance. That split is why a hotel at 55% occupancy and one at 75% are not the same business even at the same RevPAR.

Channel mix is where the quiet money goes. OTA commission at 15–20% on a large share of the book is a discount you pay whether or not you needed it. The direct-booking share is a P&L line disguised as a marketing metric.

What we would actually check

  • GOPPAR against the competitive set, not RevPAR. Two hotels with identical RevPAR can be twenty points apart on GOP margin.
  • Flow-through on the last twelve months, which reveals whether growth is being converted or spent.
  • Channel mix and the true cost of each channel, commission included.
  • The maintenance reserve, and what was deferred to make last year look better.
  • Whether the management agreement pays the operator on revenue or on profit. They behave differently, and only one of them is aligned with you.

If you are buying a hotel on a broker's occupancy figure, you are buying the one number the seller can produce most cheaply.

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