NOP - Net Operating Profit

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NOP - Net Operating Profit

What is the signification / definition of NOP in the hospitality industry?

NOP stands for Net Operating Profit, also known as NOI (Net Operating Income). It is a KPI / calculation of net operating income / profit after subtracting all of the operating expenses from the revenues generated by a hotel, a resort, a B&B or a hostel..

 

Basically speaking, net operating profit refers to the amount of money that a hotel has earned after the cost of distribution and operating expenses have been deducted. This is used to see whether a hotel is making more than it spends or is operating at a loss.

It is used to understand the cash flow of an investment before the effects of taxes and financing costs are taken into account. This performance indicator is often a crucial figure for investors as part of their estimation of the value of the property.

How do we calculate NOP?

NOP Formula: Revenue generated - Operating Expences

 

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