Performance & revenue
GOP
Also written: gross operating profit
Gross Operating Profit (GOP) is the net revenue remaining after deducting all departmental operational expenses and undistributed operating costs from total hotel revenue. It measures operational profitability before fixed charges like property taxes, insurance, management fees, interest, and depreciation are applied.
Formula
GOP = Total Gross Revenue - Total Operating Expenses
How it is used
General managers and owners use GOP to evaluate operational performance independent of ownership structure or capital financing. Monthly GOP targets drive budget decisions, staffing adjustments, and departmental cost controls across rooms, food and beverage, and maintenance. Revenue managers monitor GOP alongside RevPAR to ensure top-line gains translate into bottom-line profit rather than being absorbed by rising guest acquisition or labor costs. Investors assess GOP margins to gauge an asset's baseline earning power.
Worked example
A 200-room hotel generates $800,000 in monthly revenue across rooms, F&B, and events. Rooms expenses cost $150,000, F&B costs $120,000, and undistributed costs (administrative, marketing, utilities, maintenance) total $210,000. Total operating expenses equal $480,000. Subtracting expenses from revenue yields a monthly GOP of $320,000, resulting in a 40% GOP margin.
Common mistake
Confusing GOP with GOPPAR or NOP by failing to account for total available rooms or forgetting that fixed non-operating fees are excluded.