The hotel industry never rests for long, particularly when it comes to revenue management.
NB: This is an article from SiteMinder
There is always a new metric to consider, new ways to increase efficiency, and new strategies to boost profit. RevPAM is one of those metrics that are growing in prominence, changing the way hoteliers look at the earning potential of their property.
RevPAM is a key performance indicator hotels use within their revenue management. It stands for revenue per available metre.
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RevPAM is a metric that takes the entire space of the property into the equation, as opposed to simply looking at RevPAR or TrevPAR. This means hoteliers can get even more granular with their revenue management strategies.
Other metrics that take into account revenue outside of room charges include RevPOM (revenue per occupied metre) and RevPEC (revenue per event customer).
How to calculate RevPAM
RevPAM, as the name states, is calculated by measuring the revenue of the hotel per available metre.
Total revenue / divided by the total available square metre(s) of the space (m2).
$60,000 / 2000m2 = $30 per square 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 which 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: