EOC: Chapter 8 Question 4

a. What were the total revenues in October 2009 and October 2010?

b. What was the GOP in dollars in October 2009 and October 2010?

c. What was the percentage of GOP to total revenues in October 2009 and October 2010?

d. What was the flow-through percentage achieved by Santi’s hotel? What is your assessment of that percentage?

Answers: 

a.    The total Revenue for October 2009 was $545,000 and the total Revenue for October

2010 was 583,000.

b. The GOP in dollars for October 2009 was $162,000 and the GOP in dollars for October

2010 was $184,550

"Gross operating profit (GOP) is, in effect, total hotel revenue less those expenses that are considered directly controllable by management"(Dopson, 296).

c.  The percentage of GOP to total revenues for October 2009 was 29.72% and for October 2010 it was 31.66% "The GOPPAR is simply defined as a hotel’s total revenue minus its management’s controllable expenses per available room" (Dopson,297).

d.  The flow through percentage achieved by Santi's hotel was 59%

"Flow-through is computed to help managers identify the impact of increases in revenue on profitability. When it is high (over 50%), it usually reflects efficiency on the part of management in converting additional revenues into additional profits" (Dopson, 297). Santi's flow through percentage is at 59%, which reflects the efficiency of his management staff.