What is RevPAM? “Revenue Per Available square Meter”
Total revenue / divided by the total available square metre(s) of the space (m2).
For example:
$60,000 / 2000m2 = $30 per square metre.
It is a KPI relevant for hotels who rent out space for conferences and banquets. The utilisation efficiency of the sales department is calculated on the revenue per available square metre of the banquet space.
Also see: RevPASH
How to calculate RevPAM
RevPAM, as the name states, is calculated by measuring the revenue of the hotel per available metre.
Example: How your hotel can use RevPAM to boost revenue
Looking at RevPAM will allow you to recognise where you can start to improve the use of spaces in your hotel. For many hotels, meetings and events can make up 50% of total revenue.
Hotels that have spaces beyond accommodation rooms can optimise revenue and profits by creating and promoting a product offering that utilises those spaces.
Think about the following scenarios to get your creative juices flowing:
- If you have a large lobby space but aren’t driving any revenue in this area, it’s a wasted opportunity. If your hotel doesn’t have a bar or restaurant, you could use this lobby space on weekends for a pop-up bar or kitchen, inviting guests and the general public to enjoy the space. This will also spread the word about your hotel and attract more locals to stay with you.
- If you have meeting rooms that aren’t being utilised to their full potential, think about how you could still make money when they aren’t booked. Could you offer other services, such as massage, yoga, or various instructor-led classes?
- If your restaurant is consistently only half full, could you repurpose some of the space to add an additional amenity to your hotel, such as a games room for kids or a serviced mini-cinema experience that guests could book.
When you really start to brainstorm with RevPAM as a front of mind metric, it’s amazing how many opportunities you can find. Not just in terms of increasing income, but cutting costs too to maximise revenue.
Think about more than just your guest rooms, such as:
- Restaurants and bars
- Conference or meeting rooms
- Car parks and entrances,
- Lobby and front desk
- Common areas such as stairwells, elevators, hallways
- Amenities such as gyms, spas, or pools
RevPAM is an important KPI because it allows you to measure the full impact of your revenue management strategies. Often you’ll discover ways you can become more efficient and increase revenue across the entire space of your hotel.
Description source: https://insights.ehotelier.com/insights/2021/10/20/revpam-what-is-it-and-why-does-it-matter/
