Why Your GOP is Shrinking Despite Strong Occupancy (Unpacking the Hidden Costs Eating Your Bottom Line)
Everyone’s celebrating occupancy.
“We’re running at 82 percent!”
“Best July in years!”
“Rooms are full!”
And yet… your GOP tells a different story.
Margins are thinner. Labor is up. Expenses keep creeping. And that juicy profit you anticipated at 80 percent occupancy? Nowhere to be found.
So, what gives?
Here’s the hard truth: Occupancy doesn’t pay the bills profit does. Recently, I’ve watched operators chase top-line growth while quietly bleeding out in the fine print.
Take labor, for example.
High occupancy naturally creates higher demand: more rooms to clean, more guests to serve, more front desk coverage. One hotel I managed saw labor costs spike 12% every time occupancy jumped just 6%because we hadn’t scaled our staffing model accordingly. My housekeeping team burned out, productivity dropped, and turnover increased, creating a vicious cycle.
Then there are amenities.
Full hotels mean more breakfasts, linens, toiletries, and general wear and tear. Factor in a 15% increase in utility bills or that broken ice machine that’s always "about to be fixed," and your costs per occupied room climb faster than your ADR.
Let's not forget discounting.
You might fill your rooms, but if they’re full of low-rate groups, opaque bookings, or last-minute deals, your occupancy looks greatbut your P&L suffers dramatically. I've seen hotels proudly touting 90% occupancy while secretly discounting rates by nearly 20% just to hit that number.
So no, strong occupancy doesn’t always equal strong profit.
Especially when your rate strategy is reactive, your teams are overworked, and your departments constantly play catch-up.
Want to stop this profit leak?
Look beyond RevPAR. Start tracking cost per occupied room, calculated simply as total room expenses divided by the number of occupied rooms. This metric shines a bright light on hidden costs, pinpointing exactly where money is being lost.
This week, pick one department say, housekeeping and review their labor productivity numbers against your occupancy trends. You might discover your occupancy win isn’t really a win at all.
Remember, full rooms aren’t the goal a profitable, sustainable operation is.