Hotel Asset Management Principles
Understanding Hotel GOPPAR & TrevPAR
Key financial metrics used by hotel owners, asset managers, and REITs:
- The RevPAR Limitation: RevPAR tracks only room sales. In full-service hotels where F&B and banqueting make up 40%+ of revenue, TrevPAR captures total guest spending power.
- Why GOPPAR Rules Asset Value: Commercial hotel real estate valuations and cap rates are derived from Gross Operating Profit (GOP), not top-line revenue.
- Flow-Through Efficiency: Incremental rate increases flow through at 70%-80% to GOP, whereas incremental occupancy increases flow through at only 40%-55% due to variable housekeeping and linen costs.
- Undistributed Overhead Controls: Administrative & General (A&G), Sales & Marketing, and Utilities represent fixed daily burdens that require strict PAR monitoring.
Evaluate restaurant revenue yield in the RevPASH Lab.