Hotel KPIs explained: occupancy, ADR, RevPAR and GOP

Four numbers run a hotel or resort P&L conversation: occupancy, average daily rate (ADR), revenue per available room (RevPAR) and gross operating profit (GOP). Here is how each is calculated and how they fit together.

The formulas

Rooms available is rooms in inventory multiplied by days in the period. Rooms out of order are usually still counted; whatever your convention, apply it consistently.

A worked month

Why RevPAR matters most

Occupancy and ADR pull against each other: you can fill rooms by cutting rate, or hold rate and sell fewer rooms. RevPAR combines both, so it shows whether a pricing decision actually grew room revenue.

Gross operating profit (GOP)

Departmental expenses are the direct costs of rooms, food and beverage, spa, golf and other departments. Undistributed expenses include administration, sales and marketing, maintenance and utilities. GOP is before management fees, property taxes, insurance and debt, which is why it is the standard measure of how well the operation is run.

Reading budget variance

• Compare each KPI to budget and to the same period last year.
• For a revenue miss, split it: was it occupancy (volume) or ADR (rate)?
• For a GOP miss, check whether departmental margins fell or undistributed costs rose.
• Color-score each line (on track, watch, off track) so the monthly review starts with the red lines.

For planning and information only. Not financial, tax, legal or investment advice.