The Final Four of Hotel Revenue: The Metrics That Actually Matter

By M3 Staff

A Winning Game Plan for Maximizing Hotel Profitability

March Madness isn’t just about basketball—it’s about strategy, precision, and knowing which plays will get you the win. The same applies to hotel revenue management. While many hoteliers focus solely on RevPAR (Revenue Per Available Room), the real game-changers are the metrics that determine profitability, not just occupancy.

If you want to move from just filling rooms to maximizing profits, you need to master these Final Four key financial metrics.

1. CPOR (Cost Per Occupied Room) – The Real MVP of Cost Control

Why It Matters: Most hoteliers track RevPAR, but they often overlook CPOR, which measures how much it actually costs to service each occupied room. A hotel with high RevPAR but an even higher CPOR isn’t winning—it’s just running in place.

How to Calculate It: CPOR = Total Operating Costs / Number of Rooms Sold

Game-Changer Play:

Identify unnecessary expenses in labor, utilities, and amenities that increase CPOR
Use M3’s cost-tracking tools to monitor and optimize costs in real-time

Real-World Example: A 100-room hotel with an 80% occupancy rate had a RevPAR of $120 but a CPOR of $110. After analyzing cost inefficiencies (overstaffing and high energy costs), they implemented targeted changes, reducing CPOR by $10 per room—leading to $292,000 in annual savings.

2. Forecasting Accuracy – The Assist That Prevents Revenue Droughts

Why It Matters: Just like a basketball team needs to predict their opponent’s moves, hoteliers need to anticipate revenue trends. Poor forecasting leads to overstaffing in slow periods and missed revenue opportunities during peak demand.

Winning Strategy:

Use historical data and market trends to predict demand
Adjust staffing and pricing strategies accordingly
Automate forecasting with M3’s predictive analytics

Real-World Example: A 150-room property historically underestimated demand during local events, leading to underselling and lost revenue. After implementing automated forecasting, they optimized pricing and increased revenue by 12% during peak seasons.

Winning Strategy: Forecasting Accuracy - Aim for at least 50% Flow-through on revenue increases. Analyze cost patterns and cut unnecessary spending. Use Real-time reporting to track flow-through performance.

3. GOPPAR (Gross Operating Profit Per Available Room) – The True Profitability Scoreboard

Why It Matters: Unlike RevPAR, which only looks at revenue, GOPPAR accounts for operating expenses, giving a true picture of profitability.

How to Calculate It: GOPPAR = Gross Operating Profit / Total Available Rooms

Game-Changer Play:

Track revenue against expenses to see if high occupancy is actually translating to profit
Use M3’s financial dashboard to identify trends and improve operational efficiency

Real-World Example: A hotel with a RevPAR of $130 and an 85% occupancy rate seemed successful. However, after analyzing GOPPAR, they found low profitability due to unchecked operational costs. By implementing cost-cutting strategies, they increased GOPPAR by 15% in six months.

4. Flow-Through – The Clutch Stat for Measuring Profitability Gains

Why It Matters: Flow-through measures how much additional revenue becomes actual profit. A high flow-through means a hotel is efficiently converting revenue into profit, while a low flow-through signals excessive cost leakage.

How to Calculate It: Flow−Through (%) = (Change in Revenue / Change in Gross Operating Profit) × 100

Winning Strategy:

Aim for at least 50% flow-through on revenue increases
Analyze cost patterns and cut unnecessary spending
Use M3’s real-time reporting to track flow-through performance

Real-World Example: A hotel experiencing a 10% revenue increase only saw a 3% profit gain—indicating weak flow-through. By refining cost controls and efficiency measures, they improved flow-through by 20 percentage points in a single quarter.

Championship Takeaways: Turning Metrics Into Wins

🏀 CPOR: Cut costs without sacrificing guest experience

🏀 Forecasting Accuracy: Predict demand to optimize pricing and staffing

🏀 GOPPAR: Focus on true profitability, not just revenue

🏀 Flow-Through: Ensure revenue gains translate into higher profits

The best teams—and the best hotels—don’t just play hard; they play smart. M3’s suite of financial tools helps hoteliers track these key metrics in real-time, ensuring every decision moves you closer to victory.

Want to see how M3 can optimize your hotel’s revenue playbook? Let’s talk!