Winning on RevPAR, Losing on GOPPAR: What the Bridge Actually Says

The revenue picture (65,700 available room nights)

• Rooms revenue: prior 43,362 x $221 = $9.58M; current 48,618 x $212 = $10.31M. +$724k (+7.6%), matching RevPAR.
• F&B: $4.60M to $4.20M = -$400k (the dinner-service cut).
• Spa: $1.00M to $1.09M = +$90k. Other income flat.
• Total revenue: $16.08M to $16.50M = +$414k, TRevPAR $244.8 to $251.1 = +2.5%. The gap between RevPAR growth and TRevPAR growth is almost entirely the F&B loss.

The cost picture (+$717k) Payroll +$450k (wage award and service charge), utilities +$100k, distribution/commissions +$88k (5 points of OTA mix at 17% of $212), F&B cost of sales +$55k, other +$24k.

Bridge: +$414k revenue - $717k cost = -$303k GOP, i.e. GOPPAR $66.2 to $61.6, -6.9%. Flow-through is negative: extra revenue arrived with more than its own cost attached.

Which decisions created value? The rate/occupancy trade did:

• Incremental 5,256 room nights x ($212 - $38 variable - $36 distribution) = +$714,816
• Rate dilution on the prior base: 43,362 x $9 = -$390,258
• Net +$324,558 of contribution. So the rooms team bought occupancy profitably. Profit fell because of cost growth and the F&B decision, not because ADR came down. Answering 'we priced too cheap' would misdiagnose the problem and reverse a value-creating decision.

Do not drop TRevPAR. The owner's argument - it moves too slowly - is exactly why it belongs. In this hotel RevPAR rose 7.6% while TRevPAR rose 2.5%; that 5-point gap is the F&B outlet losing dinner service and it is the earliest signal in the pack that the asset is degrading. A scorecard that only shows RevPAR would have reported a good month.

What to add, and why

1. GOPPAR and GOP margin - the only line the owner is actually paid on. Already there; it needs to be on the same page as RevPAR, not three pages later.
2. Flow-through (incremental GOP / incremental revenue). Negative here. It is the single best summary of whether growth is profitable.
3. Net RevPAR after distribution cost. Five points of OTA mix at 17% is roughly $36 a room night; a RevPAR that ignores channel cost flatters the result.
4. Departmental profit by outlet - F&B and spa, with covers, average check and labour cost per cover. The dinner-service decision needs a P&L, not an opinion.
5. Mixed-use reporting - the 38 residences are excluded from RevPAR, so the board pack currently hides part of the asset. Report total revenue and NOI by business unit (rooms, F&B, spa, residences) alongside TRevPAR and RevPAR, plus a separate residence metric (revenue per available residence night, or rental-pool yield).
6. RevPAR index / RGI - absolute RevPAR growth means nothing without the market. If the comp set grew 10%, this was share loss.
7. Complimentary and house-use rooms as a percentage of available rooms, valued at displaced rate.

Framing for the owner: TRevPAR is not a slower RevPAR; it is the metric that caught the F&B problem. Removing it because it moved 2.5% would remove the diagnostic that explains the GOPPAR decline.

Evaluate the $10 increase rather than accept or reject it on principle. Current contribution per available room = 0.74 x ($212 - $38 - $36) = $102.16. At $222 with two points of occupancy lost (72%): contribution per occupied room = $222 - $38 - $37.7 = $146.3; x 0.72 = $105.34. That is +$3.18 per available room night, roughly $208k a year - worth having if the elasticity assumption holds. But the elasticity is unknown and asymmetric: the hotel just proved it can fill rooms at 74%, so the marginal 5,256 room nights are price-sensitive. If a $10 increase costs four points instead of two, contribution per available room falls to $94.60 and the decision destroys about $180k.

Recommendation on rate: do not raise BAR across the board. Raise rate where demand is inelastic and measurable - compression dates, weekends, last-room availability, short booking windows - and hold rate where the occupancy came from. Test on a subset of dates with a control before resetting the year.

Next quarter, in priority order

1. Cost: payroll is +$450k on a 7.6% revenue increase. Model the service charge and roster to demand; this is the largest single driver of the GOPPAR gap.
2. F&B: reinstate a limited dinner offer or re-purpose the outlet, with a covers and labour model. The outlet is costing $400k of revenue and $55k of cost of sales.
3. Distribution: 5 points of OTA mix costs about $88k. Set a channel-mix target and a net-RevPAR target, not a gross one.
4. Complimentary rooms: +700 comps at $212 is $148k of retail value. Check whether they fell on high-demand dates; if so, stop.
5. Report monthly: RevPAR, TRevPAR, GOPPAR, flow-through, net RevPAR and RGI on one page, with a one-line variance explanation each. That is what stops the next 'winning on RevPAR' month from being a surprise.