RevPsm: The KPI You Can’t Afford to Ignore

Why it’s time to optimize every corner of your hotel, literally

In an industry historically obsessed with occupancy and RevPAR (Revenue per Available Room), it's easy to overlook a metric that may reveal even more about the true profitability of your hotel: Revenue per Square Meter (RevPSM).

This single KPI shifts the focus from how many rooms you sell to how well you monetize your property’s footprint. In a market where costs are rising and margins are under constant pressure, it might be the most important performance indicator you’re not tracking.

What Is RevPsm and Why Should You Care?

Revenue per Square Meter (RevPsm) is what it sounds like: the total revenue generated divided by your hotel's total usable square meters. Unlike RevPAR or TRevPAR (Total Revenue per Available Room), this metric includes all revenue-generating spaces, not just guest rooms.

Whether it’s a parking lot, a luggage room, a rooftop terrace, or a co-working lounge, RevPsm asks one crucial question:

Are you getting maximum value out of every square meter you operate?

According to SiteMinder, RevPsm (also referred to as RevPAM—Revenue per Available Meter) is gaining traction as hotels seek more granular, space-driven insight into property performance.
Source: SiteMinder – What is RevPAM?

In today’s environment, where operational costs are rising and guest expectations are evolving, measuring revenue by room alone is no longer sufficient. Hotels that want to stay ahead must think holistically, and RevPsm provides the framework for that.

RevPsm vs. RevPAR vs. TRevPAR

Let’s briefly define the differences:

In short:

RevPAR tells you how well your rooms perform.
RevPsm tells you how well your property performs.

Every Square Meter Matters

The industry is waking up to this shift. As hoteliers seek to increase profitability without adding new rooms or staff, they turn to ancillary revenue streams that utilize existing space more efficiently.

Examples include:

• Converting a basement into a wellness or fitness studio

• Renting out meeting rooms by the hour to freelancers or local startups

• Monetizing parking lots, bike rentals, or rooftop access

• Offering secure luggage storage is an operational necessity that can become a consistent revenue generator

These aren’t side projects - they’re profit centers waiting to be optimized.

A 2022 PwC hospitality outlook report emphasized that “revenue diversification and space optimization will be key strategies for maintaining margins in a volatile demand environment.”
Source: PwC Hospitality Directions

Tools and Strategies to Track and Improve RevPsm

If you're not yet tracking RevPsm, now is the time to start. Here's how to get going:

1. Calculate Your Baseline

   Use the formula: Total Revenue ÷ Total Usable Square Meters.
   This provides a clear benchmark for assessing how effectively your space generates income.
   
   

2. Audit Underutilized Space

   Review storage rooms, rooftops, lobbies, and back-of-house areas.
   Ask: Could this space serve a guest-facing or monetized function?
   

3. Test and Measure

   Pilot ancillary services in low-risk areas of your hotel. Track their revenue contribution and evaluate ROI based on the space used.
   
   

4. Integrate into Monthly Reporting

   Add RevPsm to your KPI dashboards alongside RevPAR, TRevPAR, and GOPPAR to gain a complete view of property performance.

The New Mindset: Space Is a Strategic Asset

Optimizing space becomes your most powerful lever in a market where you can’t simply raise rates or increase occupancy to grow profits. RevPsm is the KPI that aligns perfectly with this new reality.

This isn’t just about squeezing revenue from every corner; it’s about rethinking how hotels operate, deliver value, and stay profitable in an increasingly competitive landscape.

Smart hoteliers aren’t just filling rooms.
They’re filling space with purpose, efficiency, and profitability in mind.

Curious how your property stacks up in terms of RevPsm?

Start tracking it. Start testing. The next evolution of hotel management is shifting from occupancy-focused thinking to space-focused profitability.