What is the meaning / 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.
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 examine the cash flow of an investment before the effects of taxes and financing costs are considered. This performance indicator is often a crucial figure for investors as part of their estimation of the value of the property.
How do you calculate NOP?
NOP Formula: Revenue generated – Operating Expences
- Net Operating Profit