In contemporary hospitality and in the context of business travel, there is a notable phenomenon that I would like to refer to as The Incredible Shrinking Hotel Room.
We are looking at smaller spaces to stay in, even among luxury establishments, possibly in keeping with the current ethos of experiential tourism: spend more time outdoors, rather than indoors; hence the need for just a space to rest and wash up after a day of exploration.
The matter was discussed during the recently concluded South East Asia Hotel Investors’ Summit (SEAHIS) in Bangkok; specifically at a round table discussion helmed by Hilton’s vice-president for development in Southeast Asia Maria Ariizumi; Brookfield Asset Management vice-president for real estate Ethan Quek; and Tan Kim Seng, executive director of the Hiap Hoe Group.
The discussion centred on the question of how much value can operators create per square metre?
Participants explored the economics and psychology of room design and saw how hospitality in the region and beyond are more than willing to challenge long-held assumptions about space.
There was one point in particular that was made clear: smaller rooms succeed only when they deliver an experience that guests perceive as worthwhile.
Shifting to a revenue per square metre standard
Previously, rooms at a luxury establishment boasted an average area of 45 square metres, while economy lodgings had considerably smaller spaces.
But rather than focusing on area size, today’s hoteliers are contemplating how much revenue can a hotel generate from every square metre of built space.
This has resulted in a paradigm shift wherein public spaces, rooftop amenities, social programming, and shared facilities are increasingly viewed as revenue-generating ecosystems rather than cost centres.
Consider one particular example: there is currently a luxury lifestyle brand whose entry-level rooms begin at 25 square metres while standard rooms exceed 40 square metres.
These smaller rooms are not designed merely to maximise density, but more to attract younger, style-conscious guests who create the atmosphere that wealthier customers seek to buy into.
By doing so, room size at this particular property became a portfolio strategy rather than a fixed standard.
This revenue per square metre mentality mirrors trends already seen in residential real estate, retail, and co-working where utilisation often matters more than absolute size.
Small rooms aren’t always the cheap ones
Perhaps the most striking takeaway was the industry's growing recognition that smaller rooms are not synonymous with lower prices.
In fact, guests may pay premium prices for small spaces if the experience aligns with their expectations; at the same time, the opposite situation is also true and valid.
Think about it: regardless of its size, a poorly designed room can undermine guest satisfaction in any property be it budget or luxury; and ergonomics matter more than dimensions alone.
In which case, lifestyle hotels could have the upper hand as these redistribute value away from the private room and into shared experiences like bars, wellness programmes, social spaces, and curated events.
These establishments encourage their guests to spend less time in their rooms and more time engaging with the wider property.
This creates a compelling equation: a smaller room becomes acceptable, even desirable, if it is offset by memorable experiences elsewhere in the hotel.
The concept is already extending into hybrid hospitality models, as hostels with luxury amenities, pod hotels with yoga studios, and lifestyle brands blending communal spaces with premium food and beverage offerings are reshaping guest expectations.
In some concepts, guests sleep in spaces as small as 2.5 square metres while spending the majority of their time in social or experiential environments.
Needless to say that the room is no longer the product at the end of the day; instead, it serves more as a gateway to the product which is a holistic and immersive experience for every guest who checks in.
