Hospitality Investment 101:

[Account Closed]

Hospitality Investment 101: The hotel metrics every investor should actually understand-
If you invest in hotels (or are thinking about it), the numbers you look at matter just as much as the property itself. These few metrics tell you whether a hotel is just busy… or actually making money.
Here’s a simple breakdown below without the industry fluff.
P&L (Profit & Loss Statement)
This is the financial report that shows what a hotel brings in, what it spends, and what’s left over.
It includes:
Room revenue and other income (food, parking, events, etc.)
Operating costs (management, maintenance, utilities, insurance, marketing, taxes)
Net Operating Income (NOI)
Debt payments
Final cash flow to the investor
If you only remember one thing:
NOI = Income – Operating Expenses.
That’s the number used to value hotels and determine if a deal works.
I like to think of a P&L like a scoreboard — income is what you score, expenses are what get deducted, and what’s left is your real result.
ADR – Average Daily Rate
This tells you how much a hotel makes per occupied room.
Formula:
Room revenue ÷ rooms sold
In simple terms: How much did each guest pay on average?
Occupancy
This shows how full the hotel is.
Rooms sold ÷ rooms available
High occupancy means demand is strong. Low occupancy means rooms are sitting empty.
RevPAR – Revenue Per Available Room
This combines pricing and demand into one number.
ADR × Occupancy
or
Room revenue ÷ total available rooms
RevPAR answers the real question:
How much money is each room making, whether it’s occupied or not?
GOPPAR – Gross Operating Profit Per Available Room
This is one of the most important numbers for investors.
Gross operating profit ÷ available rooms
It shows how much profit each room is producing after expenses. You can have strong revenue, but if costs are out of control, GOPPAR will expose it.
TRevPAR – Total Revenue Per Available Room
This looks at everything the hotel earns — not just rooms.
Total hotel revenue ÷ available rooms
That includes food, bars, events, parking, spa, and more. It shows how well the hotel is monetizing each room across all income streams.
Quick way to think about it
ADR = what you charge
Occupancy = how many rooms you fill
RevPAR = how much revenue each room produces
TRevPAR = how much total income each room generates
GOPPAR = how much profit each room delivers
That’s the difference between a busy hotel and a good investment.