Definition
GOP is a hotel's gross operating profit — revenue less operating expenses, before items such as rent, interest, depreciation and tax — and in a management contract it is the base on which the operator's incentive fee is calculated.
Also called: Gross Operating Profit
In practice
GOP is the standard measure of how well a hotel is being operated, because it covers the costs an operator genuinely controls and excludes the capital-structure items they do not. It is the number the monthly performance review should be built around.
In a hotel management contract, GOP does double duty: it measures operating performance and it determines the operator's incentive fee, typically six to ten per cent of it. That makes the contractual definition commercially significant, not merely technical.
The question an owner should ask precisely is what is deducted before GOP is calculated. If base fees and marketing contributions sit below the line rather than above it, the incentive fee is being paid on a larger number than the owner expected.
Why it matters to an owner
GOP is where an owner's diligence pays for itself. Two contracts quoting the same incentive percentage can cost materially different amounts depending on how each defines the profit it is charged against.
Frequently Asked Questions
Usually six to ten per cent of gross operating profit, alongside a base fee of roughly one to three per cent of gross revenue.
Exactly what is deducted before GOP is calculated. Whether base fees, marketing and loyalty contributions and centralised charges sit above or below the line changes the fee an owner pays.