Why should a Hotel Adapt GoPPAR to RevPAR Post-COVID Pandemic?

Pallab Goswami | 30th July 2021

This is the right time for the hotels to adapt and thrive! The hotels had the worst time. Now, it is the right time for the hospitality industry to bounce back and soar high! The Hospitality industry will need to adapt to certain factors to enhance their business as they missed out a lot. Hospitality industry thrives by offering their goods and services to the clients at the best pricing through the best distribution channel. Only profitable companies can survive in the long run. So hotel owners must be active in successful hospitality deploying and following the correct revenue management philosophy. Hence, adapting GoPPAR to RevPAR will help the hoteliers to understand their profit post the Covid pandemic.

Let's Brush up with the basics of RevPAR & GoPPAR!

The revenue management metrics RevPAR and GoPPAR both have simple formulas, which are as follows:

RevPAR = Rooms Revenue / Rooms Available OR RevPAR = Average Daily Rate x Occupancy Rate
&
GoPPAR = Gross Operating Profit / Available Rooms

RevPAR (Revenue per available room) helps to evaluate a hotel's capacity to satisfy its available rooms at an average rate. And GoPPAR (Gross Operating Profit Per Available Room) is the most powerful means to study the performance of a hotel. GoPPAR allows Hospitality Industry to apply the laws of economics. It permits you to recognize the value of the property is at any given time. It enables us to make efficient enhancements; that allow the hotels to reach their goals.

How do RevPAR and GoPPAR determine profit?

RevPAR is not capable of determining a hotel's capacity to generate income from other departments. It does not reflect the influence of other departments connected with the Rooms Department. Instead, it focuses only on the room department. Consider two hotels with the same number of rooms and the same RevPAR, For instance, Rs.1000. But the first hotel shows a 40% occupancy level with ADR (Average Daily Rate) Rs.2000. The second hotel's occupancy is 75% and ADR Rs.1500. Still, it is essential to take the total revenue of the second hotel into consideration. The total revenue generated will be higher because of its higher occupancy level. When you adapt to GoPPAR, It will not be the same for the two hotels. The second hotel will have a higher GoPPAR value. So, we can measure a hotel's ability to generate revenue from another department.

Know how GoPPAR promotes Variable Expenses

GOPPAR considers the growth of variable expenses when there is an increase in the hotel's turnover. The extra income from a room's sales like Food & Beverage incomes, laundry, telephone, and others are taken together with the expense of OTA's (Online Travel Agent) or GDS (Global Distribution System) channels. For example, if an OTA decides to increase its commission, GoPPAR notifies us, while RevPAR will not be efficient.

How does the Cost of sales Affect RevPAR & GoPPAR?

RevPAR never takes the expenses of the sale of the room into consideration. The commission fee, payments to GDS. Consider a room sold for RS.1000, with a 20% commission for the intermediate channel. It will have a positive effect on RevPAR. Meanwhile, Rooms directly sold to the client for 900 is more profitable, but the RevPAR value does not have any effect on such occasion. The RevPAR values may be the same for two hotels, but profit differs. But adapting GoPPAR will eliminate missing out on such essential data. RevPAR is just a mere indicator used to calculate a hotel profile in the market, which reveals its interaction with the business. It may help us compare ourselves with competitor, but the entire operating profit can be traced by adapting to GOPPAR.

Adapting to GoPPAR favors growth!

After the COVID pandemic situation, it is necessary to have a detailed understanding of the hotel's performance to make our hotel thrive. So, Hotels must adapt GoPPAR to RevPAR Post Covid Pandemic for efficient economic outcomes. A passionate hotelier must check out the website of EaseRoom. EaseRoom offers seamless and intelligent revenue solutions. GoPPAR is an ultimate solution for hoteliers who see their hotel as a whole complete asset. We will help the hotels to increase occupancy and generate more profit.