Separate rooms-revenue formation from activity-driven cost growth, cost-intensity movement, and the remaining operating contribution that determines how much of a rooms gain actually reaches GOP.
About this interactive
The analysis compares two hotel operating periods. ADR, occupancy, and available room nights are attributed without an arbitrary interaction bucket by averaging each driver’s room-revenue effect across every possible ordering. Distribution cost is normalized to room revenue, while labor and other variable operating cost are normalized to occupied room nights, separating activity-driven cost from changes in cost intensity. Reported GOP is then reconciled through an explicit unclassified operating contribution for items not separately entered, including possible non-room revenue or other operating costs. Static recovery thresholds show the ADR or occupancy required to preserve Period A GOP dollars if the entered Period B cost dollars and unclassified operating contribution remain fixed. No external hotel benchmark is imposed. For more information, visit our Hotel GOP Improvement practice.
Room revenue formation
Each rooms driver is introduced in every possible ordering and its marginal revenue effect is averaged. The three effects therefore reconcile exactly to the room-revenue movement while sharing interaction effects across the underlying drivers.
Profit conversion
The conversion path separates cost growth expected from the entered activity change, additional movement in the listed cost intensities, and the remaining unclassified operating contribution required to reconcile to reported GOP.
Cost response
Distribution is normalized to room revenue. Labor and other variable operating cost are normalized to occupied room nights. The difference between actual Period B cost and the Period A-intensity equivalent is the listed cost-intensity movement.
Static GOP preservation
These thresholds hold the entered Period B cost dollars and unclassified operating contribution fixed. They show the rooms economics required to preserve Period A GOP dollars, not a forecast of how cost would behave if rate or occupancy changed.
What the interactive shows
HOTEL GOP CONVERSION ANALYZER: ILLUSTRATIVE DEFAULT RECORD INPUTS Period A ADR: $190.00 Period B ADR: $198.00 Period A occupancy: 72.0% Period B occupancy: 76.0% Period A available room nights: 30,000 Period B available room nights: 30,000 Period A distribution cost: $320,000 Period B distribution cost: $385,000 Period A labor cost: $1,450,000 Period B labor cost: $1,600,000 Period A other variable operating cost: $680,000 Period B other variable operating cost: $720,000 Period A reported GOP: $1,050,000 Period B reported GOP: $1,185,000 COMPUTED POSITION Period A occupied room nights: 21,600 Period B occupied room nights: 22,800 Period A room revenue: $4,104,000 Period B room revenue: $4,514,400 Room revenue movement: $410,400 Period A RevPAR: $136.80 Period B RevPAR: $150.48 Period A unclassified operating contribution: −$604,000 Period B unclassified operating contribution: −$624,400 Unclassified operating movement: −$20,400 GOP movement: $135,000 Incremental GOP conversion: 32.9% SEQUENCE-NEUTRAL ROOM REVENUE FORMATION ADR effect: +$177,600 Occupancy effect: +$232,800 Available room nights effect: $0 Attributed room revenue movement: $410,400 COST RESPONSE Distribution cost activity effect: $32,000 Distribution cost intensity movement: $33,000 Labor activity effect: $80,556 Labor intensity movement: $69,444 Other variable operating cost activity effect: $37,778 Other variable operating cost intensity movement: $2,222 Total activity-driven listed cost increase: $150,333 Total listed cost-intensity movement: $104,667 CONVERSION COUNTERFACTUAL GOP if listed Period B cost intensities remained at Period A levels: $1,289,667 Incremental GOP conversion at Period A listed cost intensity: 58.4% Conversion lost to listed cost-intensity deterioration: 25.5 percentage points STATIC GOP-PRESERVATION THRESHOLDS Room revenue required to preserve Period A GOP dollars at the entered Period B cost position: $4,379,400 ADR required at Period B occupancy and capacity: $192.08 Occupancy required at Period B ADR and capacity: 73.73% Gross ADR equivalent of listed cost-intensity movement: $4.59 per occupied room night FINDING Room revenue increased by $410,400 and reported GOP increased by $135,000, producing 32.9% incremental GOP conversion. Sequence-neutral room-revenue attribution assigns $177,600 to ADR and $232,800 to occupancy. Expected activity growth in the entered distribution, labor, and variable-cost pools absorbed $150,333. A further $104,667 was absorbed because those listed costs ran above their Period A intensities, reducing incremental GOP conversion by 25.5 percentage points. Unclassified operating contribution moved by −$20,400. Holding the entered Period B cost dollars and unclassified operating contribution fixed, ADR of $192.08 at current occupancy would preserve Period A GOP dollars. METHOD STATUS Management-entered assumptions. Room revenue equals ADR multiplied by occupancy and available room nights. ADR, occupancy, and available-room-night effects are sequence-neutral: each driver is introduced in every possible ordering and its marginal room-revenue effect is averaged across those orderings. Distribution activity cost is normalized to Period A distribution cost as a share of room revenue. Labor and other variable operating activity cost are normalized to Period A cost per occupied room night. The difference between actual Period B listed cost and the activity-equivalent Period B cost is classified as cost-intensity movement. Unclassified operating contribution equals reported GOP less room revenue after the three entered cost pools and can contain non-room revenue, fixed or other operating costs, or other operating items not separately entered. It is not classified as cost intensity. Static GOP-preservation thresholds hold entered Period B cost dollars and unclassified operating contribution fixed; they are not forecasts of how cost would respond to a different ADR or occupancy. No external hotel benchmark or hidden weighting is used.
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