GOP (Gross Operating Profit)
GOP (Gross Operating Profit) is the profit a hotel earns from operations after deducting departmental costs and undistributed operating expenses (such as sales and marketing, administration, utilities and maintenance), but before management fees, fixed charges like property tax and insurance, depreciation, interest and income tax. It is the most widely used measure of how well management runs the property itself, independent of ownership and financing structure.
Formula
GOP = Total Revenue − Departmental Expenses − Undistributed Operating Expenses
GOP Margin = GOP / Total Revenue × 100
Example
A hotel earns €5,000,000 in total revenue. Departmental costs (rooms, F&B, spa) are €1,900,000 and undistributed expenses are €1,350,000.
GOP = 5,000,000 − 1,900,000 − 1,350,000 = €1,750,000
GOP Margin = 1,750,000 / 5,000,000 = 35%
Why it matters
GOP shows whether top-line growth actually turns into profit. A hotel can raise RevPAR yet see GOP fall if commissions, marketing and labour grow faster. Owners and operators use it to set management-fee bases, compare properties and judge the real cost of channel mix: shifting bookings to higher-commission OTA channels reduces GOP even when revenue is unchanged.
Related
- GOPPAR divides GOP by available rooms, making it comparable across properties of different sizes.
- Flow-Through measures how much of each additional revenue euro reaches GOP.
- EBITDAR sits below GOP and adds back rent, depreciation and similar items for financial analysis.
- Cost of Distribution is one of the largest levers on GOP.