What is RevPAM for Hotels?

RevPAM stands for revenue per available square meter. It’s an increasingly important hotel performance metric used to measure the profitability of alternative spaces upsold within a hotel, such as workspaces, parking, meeting rooms, and event spaces. 

With the rise of trends like bleisure (business + leisure) travel, remote work, and a greater demand for flexible, multi-use environments, hotels are capitalizing on underutilized areas to diversify revenue streams. 

RoomRaccoon’s customers boost RevPAM by selling alternative spaces through the Grey Rooms feature, unlocking new revenue streams. In 2024, during the high season (June, July, August), a typical RoomRaccoon customer using Grey Rooms generated an additional $1,992 in revenue. Those with function spaces earned even more than the average.

How to calculate RevPAM

RevPAM, as the name states, is calculated by measuring the revenue of the hotel per available meter. Total revenue / divided by the total available square meter (s) of the space (m2).

For example:

With a total revenue of $75,000 and an area of 2500 square meters, the cost is $30 per square meter.

You can calculate the RevPAM for the entire hotel, but it’s usually more insightful to calculate and compare the RevPAM of individual spaces. Here are a few examples:

Hotel Conference Room

Hotel Gift Shop

Hotel Spa

Why measure RevPAM and not just sales generated?

You might be wondering why you should bother adding another metric to your performance reporting. Well, RevPAM helps you:

Maximize space efficiency: 

Assess whether you’re making the most of your available space; a large room generating the same revenue as a smaller one may be underperforming.

Make informed decisions: 

Consider repurposing spaces, redesigning layouts, or changing pricing strategies for areas that aren’t generating high returns per meter.

What is the difference between RevPAM and RevPAR?

RevPAR, short for revenue per available room, measures the revenue generated based on room occupancy and average daily rates. Hotels often use dynamic pricing to optimize their RevPAR. On the other hand, RevPAM focuses on how space is utilized across your hotel, which is useful for areas that generate non-room revenue. 

Considering both of these metrics, along with others like TrevPAR, will provide you with a comprehensive view of your hotel’s overall performance.

Benefits of maximizing alternative hotel spaces 

With technology such as online check-in, many hotels no longer rely on traditional spaces like lobbies, creating opportunities to downsize or transform these areas into revenue-generating opportunities. In fact, a recent survey found that 61% of guests are willing to pay more for a personalized experience. 

Here are 3 benefits of maximizing alternative spaces in your hotel: 

1. Attracting non-overnight guests

Event spaces, rooftop bars, and co-working spaces are not just for overnight guests. By opening these areas to the local community and non-overnight visitors, you can attract a broader audience and drive more foot traffic into your hotel. 

As a result, you generate additional revenue streams through food and beverage sales, event bookings, and day-use services. This increased activity not only boosts immediate sales but also enhances your hotel’s brand visibility within the local area.

2. Creating more value-added packages

You can use alternative spaces to create value-added packages that go beyond the traditional bed and breakfast. 

By bundling services, you can offer guests more tailored experiences that cater to diverse needs and different types of travelers—whether it’s a relaxation package that includes sauna access or a bleisure package offering a dedicated workspace. 

This approach also encourages higher spending, as guests are more inclined to indulge in these added services when presented with an appealing, all-in-one package.

3. Boosting your hotel’s reputation as a multi-functional destination

International travelers, especially those unfamiliar with the area, often prefer accommodations that offer a variety of on-site amenities and easy access to essential services, such as restaurants, gyms, and business centers. 

Offering these facilities positions your hotel as a convenient and appealing choice for travelers looking for more than just a place to sleep.

How to Maximize RevPAM in your hotel

In the infographic below, discover 7 creative ways to transform your hotel space and boost revenue.

Explore the top 8 revenue management strategies for 2025. 

The future of RevPAM in hospitality

The future of RevPAM in hospitality is set to become an increasingly important metric as travelers’ preferences shift toward more unique experiences and hoteliers look for innovative ways to maximize revenue from every available space.

With many property management systems (PMSs) on the market, it’s crucial to choose one that offers the right features for your business. Look for a PMS that enables you to:

• Upsell at every stage of the guest journey
• Seamlessly connect with other hospitality software, like event management systems
• Create and sell unique packaged rates directly on your website
• Monetize alternative spaces with features like RoomRaccoon’s Grey Rooms.

Ready to see how it works? Book a demo today.