Glossary

Gross Operating Profit (GOP)

Also known as: House Profit, GOP

Under the Uniform System of Accounts for the Lodging Industry, total hotel revenue less departmental expenses and undistributed operating expenses, before deducting fixed charges such as property tax, insurance, and the FF&E reserve for replacement.

GOP is the hotel industry's standard proxy for operating performance before ownership-level costs and is the figure to which incentive management fees are most commonly pegged, precisely because it captures everything within the manager's day-to-day control — labor, departmental costs, overhead — while excluding items the manager typically does not control, which are classified as fixed charges below the GOP line. The metric was historically called 'house profit,' a term still used interchangeably with GOP in some markets. A common misconception among readers unfamiliar with hotel accounting is treating GOP as equivalent to NOI; they differ materially because NOI is calculated after fixed charges, including the FF&E reserve deduction, while GOP is calculated before them, so a hotel's GOP margin will always run meaningfully higher than its NOI margin, and confusing the two overstates the cash flow actually available for debt service.