# Hotel profit margin in India: benchmarks, GOP vs net profit and a 20-room example

> How much a hotel really keeps depends on which profit you measure. Here are the published Indian benchmarks, what each one includes, and a worked 20-room month from revenue down to net profit.

- URL: https://guesthawk.com/guides/hotel-profit-margin
- Category: Finance
- Tags: Accounting, Revenue management, Restaurants
- Published: 11 November 2026
- Updated: 11 November 2026
- Publisher: GuestHawk (https://guesthawk.com)

Ask ten hotel owners about their **hotel profit margin** and you will get ten numbers that cannot be compared. One means what is left after salaries and power. Another means what is left after rent. A third means what reaches the bank after the loan instalment. The published benchmarks have the same problem: a figure for large listed hotel companies tells a 20-room owner very little.

This guide sets out the different profit lines a hotel reports, the Indian benchmarks that exist and what each one covers, and a worked 20-room month from room revenue down to net profit, owned and leased. The example is illustrative. Put your own figures into the same structure.

## The profit lines in a hotel P&L

Hotels in most of the world report on the Uniform System of Accounts for the Lodging Industry (USALI). Our guide to [hotel accounting](https://guesthawk.com/guides/hotel-accounting) explains it. The structure runs from top to bottom like this:

1. **Departmental profit.** Each revenue department (rooms, food and beverage, other) minus its own direct costs: its staff, its supplies, its commission.
2. **Gross operating profit (GOP).** Total departmental profit minus the costs nobody owns directly: administration and accounts, sales and marketing, repairs and maintenance, and utilities.
3. **EBITDA.** GOP minus management fees (if a brand or operator runs the hotel) and fixed charges: rent, property tax and insurance.
4. **Net profit.** EBITDA minus depreciation, interest and income tax.

GOP measures how well the hotel is run. EBITDA and net profit also reflect how it was bought, built or leased. That is why an operator is judged on GOP and an owner looks at net profit.

## Average hotel profit margin: what the Indian surveys say

These are the published figures most often quoted. Read the sample and the profit line before you compare yourself with any of them.

| Source | Sample | Profit line | Figure |
| --- | --- | --- | --- |
| FHRAI Indian Hotel Industry Survey 2017-18 (STR, Horwath HTL) | 475 hotels | GOP margin, independent hotels up to 50 rooms | 22.0% |
| Same survey |  | GOP margin, 3-star hotels | 24.9% |
| Same survey |  | GOP margin, 5-star deluxe hotels | 39.6% |
| HVS Anarock, India Hospitality Industry Overview 2024 | Organised, largely branded hotels | Sector GOP | 46.4% |
| ICRA, March 2026 | 13 large hotel companies | Operating margin, FY2026 (estimate) | 34 to 36% |
| Same ICRA report |  | Operating margin before the pandemic | 20 to 22% |

Three points stand out. First, margins rise with scale and positioning: the FHRAI survey found small independent hotels well below five-star hotels. Second, the large companies' margins have risen sharply since the pandemic, which ICRA attributes to cost cutting and operating leverage. Third, the only figure close to a small independent hotel is the FHRAI one, and it is from 2017-18. Treat it as a rough floor to beat, not a target.

Why do small hotels earn less? Partly because some costs barely shrink with size: a manager, an accountant, a night receptionist, a generator, a lift and a website cost much the same for 20 rooms as for 60. Partly because many small independents depend heavily on OTAs, and pay commission on a large share of their nights, where a brand brings its own loyalty members and direct bookings. And partly because they rarely have the banquet business that lets larger hotels sell the same kitchen and staff twice a day.

For a sense of what the bigger hotels earn per room: HVS Anarock put India's calendar 2025 nationwide occupancy at 63 to 65 per cent with an average room rate of about ₹8,500 to ₹8,700. Most independent hotels sell at a fraction of that rate, with less room to absorb fixed costs.

## Worked example: a 20-room hotel's month

Take a 20-room hotel with a small restaurant: 60 per cent occupancy (360 room-nights in a 30-day month), an average room rate of ₹2,200, half its nights sold through OTAs at an illustrative 18 per cent commission. All revenue is before GST. Every cost is illustrative.

| Line | Revenue | Costs | Profit | Margin |
| --- | --- | --- | --- | --- |
| Rooms (360 × ₹2,200) | ₹7,92,000 | ₹2,35,280 | ₹5,56,720 | 70.3% |
| Food and beverage | ₹2,00,000 | ₹1,50,000 | ₹50,000 | 25.0% |
| Other (laundry, cabs) | ₹30,000 | ₹15,000 | ₹15,000 | 50.0% |
| **Departmental total** | **₹10,22,000** | **₹4,00,280** | **₹6,21,720** | **60.8%** |
| Administration and accounts |  | ₹1,10,000 |  |  |
| Sales and marketing |  | ₹35,000 |  |  |
| Repairs and maintenance |  | ₹50,000 |  |  |
| Power, water and gas |  | ₹1,30,000 |  |  |
| **Gross operating profit (GOP)** |  |  | **₹2,96,720** | **29.0%** |

The rooms costs are housekeeping and front office staff (₹1,10,000), OTA commission on half the room revenue (₹71,280) and laundry and guest supplies at ₹150 per occupied room (₹54,000).

A 29 per cent GOP margin is above the FHRAI figure for small independents, and that is deliberate: this hotel has a lean team, a modest restaurant and no banquet hall. Many small hotels sit lower.

## GOP vs net profit: owned or leased

Now carry the same GOP down to the bottom line twice: once for an owner who built with a loan, and once for an operator who leases the building at ₹2,50,000 a month (the rent in our guide to [leasing a hotel in India](https://guesthawk.com/guides/leasing-a-hotel-in-india)).

|  | Owned, with a loan | Leased |
| --- | --- | --- |
| Gross operating profit | ₹2,96,720 | ₹2,96,720 |
| Rent | nil | ₹2,50,000 |
| Property tax and insurance | ₹25,000 | ₹10,000 |
| **EBITDA** | **₹2,71,720 (26.6%)** | **₹36,720 (3.6%)** |
| Depreciation | ₹60,000 | ₹30,000 |
| Interest | ₹1,10,000 | nil |
| **Profit before tax** | **₹1,01,720 (10.0%)** | **₹6,720 (0.7%)** |

Same hotel, same guests, same team. The owner keeps about 10 per cent of revenue before tax; the leaseholder barely breaks even. At this occupancy and rate, the rent is too high for the business, or the rate is too low for the rent. That is why our [hotel business plan](https://guesthawk.com/guides/hotel-business-plan) guide insists on testing the numbers before signing anything.

## Break-even: the occupancy where margin starts

Margin in a hotel is not a straight line. Most costs are fixed for the month: salaries, power for common areas, rent or interest, the manager's time. Only a few rise with each room sold. So below a certain occupancy the hotel loses money, and above it each extra room adds a large share of its rate to profit.

Work it out for the example. Each room-night sold at ₹2,200 carries about ₹348 of variable cost: ₹198 of commission (18 per cent on the half sold through OTAs) and ₹150 of laundry and guest supplies. That leaves ₹1,852 towards fixed costs.

For the leased hotel, the monthly fixed costs are rooms staff (₹1,10,000), administration, marketing, maintenance and power (₹3,25,000), rent (₹2,50,000) and insurance (₹10,000): ₹6,95,000. The restaurant and other services contribute ₹65,000, leaving ₹6,30,000 for the rooms to cover. ₹6,30,000 ÷ ₹1,852 is about 341 room-nights, or **57 per cent occupancy** before depreciation. At 60 per cent the hotel is only just past that line, which is why its profit is so thin.

For the owned hotel, replace the rent and insurance with interest and property costs (₹1,35,000). Fixed costs fall to ₹5,70,000, the rooms need to cover ₹5,05,000, and break-even falls to about 273 room-nights, or **46 per cent occupancy**. Same building, same team, an 11-point difference in the occupancy needed to stay afloat.

Know your own break-even occupancy by heart. It tells you how much a slow month will cost and how hard to push in the shoulder season.

## Profit margin per room

Owners often ask what each room earns. Use the same monthly figures:

- **GOP per available room per night (GOPPAR):** ₹2,96,720 ÷ 600 available room-nights = about ₹495. Our [RevPAR guide](https://guesthawk.com/guides/revpar) explains this measure next to RevPAR.
- **Rooms department profit per occupied room:** ₹5,56,720 ÷ 360 = about ₹1,546.
- **GOP per occupied room:** ₹2,96,720 ÷ 360 = about ₹824.

The gap between ₹1,546 and ₹824 is the share of administration, maintenance, power and marketing each sold room has to carry. Selling more rooms spreads those costs thinner, which is why margins rise fast once occupancy passes break-even. Selling ten more room-nights at ₹2,200, with about ₹350 of variable cost each (commission, laundry, supplies), adds about ₹18,500 to GOP and lifts the margin.

## F&B margin in hotels

Food and beverage brings guests in and fills the banquet calendar, but it keeps far less of each rupee than rooms. The FHRAI survey for 2017-18 found F&B and banquets made up 42.3 per cent of total revenue in the hotels it surveyed, so for many hotels the restaurant is not a side business.

In our example the restaurant keeps 25 per cent. Its costs break down as:

| F&B cost | Amount | Share of F&B revenue |
| --- | --- | --- |
| Food and beverage cost | ₹68,000 | 34% |
| Kitchen and service staff | ₹70,000 | 35% |
| Gas, supplies, breakage | ₹12,000 | 6% |
| **Total** | **₹1,50,000** | **75%** |

The number to watch weekly is food cost as a share of food revenue. Count stock on a fixed day, add purchases, subtract closing stock and divide by food sales. A rise of a few points usually means waste, portion drift or missing bills. A [hotel POS](https://guesthawk.com/guides/hotel-pos-system) that posts every order to a bill and links it to stock makes this measurable.

## How to improve your hotel profit margin

The levers that move margin in a small Indian hotel, roughly in order of size:

1. **Rate before occupancy.** A ₹100 rise in average room rate at the same occupancy adds ₹36,000 a month in our example, almost all of it profit. Our guide to [ADR](https://guesthawk.com/guides/adr-in-hotel) covers how to measure and lift it.
2. **Commission.** Moving a share of OTA nights to direct booking keeps the commission. See [cutting OTA commission](https://guesthawk.com/guides/cutting-ota-commission).
3. **Power.** Often the largest cost after staff. Room key cards that cut power, timers on corridor lights, and maintained air-conditioners pay back quickly.
4. **Rosters that follow occupancy.** Plan housekeeping and restaurant shifts against forecast arrivals and departures, not a fixed pattern.
5. **Food cost discipline.** Weekly stock counts, standard recipes and portion sizes.
6. **GST as a cost.** Rooms at ₹7,500 a night or less carry 5% GST without input tax credit, so GST paid on supplies and commission cannot be recovered. Price your rooms with that in mind; see [GST on hotel rooms and restaurants](https://guesthawk.com/guides/gst-on-hotel-rooms-and-restaurants).

## Measure it monthly, watch it daily

Margin is a monthly number, but it is made or lost every day: a discount that should not have been given, a cash shortfall, a week of high food cost. Close the books each month in the USALI structure so this month compares with last month and with your plan, and check the drivers daily.

GuestHawk's [finance and owner reports](https://guesthawk.com/platform#finance) put expenses, payroll, inventory and cash beside revenue, so profit is visible daily rather than at month-end. See how it fits [independent hotels](https://guesthawk.com/solutions#hotels).

## Frequently asked questions

### What is the average hotel profit margin in India?

It depends on the hotel and on which profit is measured. ICRA expects its sample of 13 large hotel companies to report operating margins of 34 to 36 per cent in FY2026. The FHRAI survey for 2017-18 reported a gross operating profit margin of 22.0 per cent for independent hotels with up to 50 rooms. Small independent hotels should compare themselves with the second figure, not the first.

### What is the difference between GOP and net profit in a hotel?

Gross operating profit (GOP) is revenue minus the costs of running the hotel: departments, administration, sales, maintenance and utilities. Net profit then also deducts rent or property costs, management fees, insurance, depreciation, interest and income tax. A hotel can have a healthy GOP and still make a loss if its rent or loan is too heavy.

### What is a good profit margin per room?

Measure it as gross operating profit per available room per night, known as GOPPAR (see our [RevPAR guide](https://guesthawk.com/guides/revpar)). In our illustrative 20-room example it is about ₹495 a night. Compare it month on month and against your plan, rather than against a national figure.

### What is a normal F&B margin in a hotel?

Restaurant and banquet margins are usually far below rooms margins, because food, kitchen staff and service cost more. In our illustrative example the restaurant keeps 25 per cent of its revenue after food cost, staff and supplies, against about 70 per cent in rooms. Track food cost as a share of food revenue every week.

### Does GST affect hotel profit margin?

Yes. Rooms at ₹7,500 a night or less carry 5% GST without input tax credit, so the GST you pay on supplies, repairs and commission is a cost. See [GST on hotel rooms and restaurants](https://guesthawk.com/guides/gst-on-hotel-rooms-and-restaurants).

## Sources

- [ICRA: The Indian Hospitality Industry, March 2026](https://www.icra.in/Rating/DownloadResearchSummaryReport?id=6849)
- [HVS–Anarock: India Hospitality Industry Overview 2025](https://www.hvs.com/Print/HVS-Anarock-India-Hospitality-Industry-Overview-2025?id=10451)
- [HVS–Anarock: India Hospitality Industry Overview 2024](https://www.hvs.com/Print/HVS-ANAROCK-India-Hospitality-Industry-Overview-2024?id=10158)
- [Hospitality Net: FHRAI Indian Hotel Industry Survey findings on performance and profitability](https://www.hospitalitynet.org/news/4092051/india-hotel-survey-reveals-key-findings-regarding-performance-opportunities-profitability)