This study examines the effect of meeting space capacity on hotel operating performance. We use Resource-Based View (RBV) of the firm as the theoretical foundation. We employ a national-level dataset with more than 20,000 hotels in the United States for the 2007–2012 period. We find that meeting space has a non-linear effect on hotel operating performance. That is, at low levels of meeting space, meeting space capacity is negatively related to hotel operating performance. At high levels of meeting space, meeting space capacity has a positive influence on operating performance. These findings provide insights for hotel owners, developers and practitioners in planning hotel meeting space capacity. •The association between meeting space capacity and hotel operating performance is investigated.•RBV of the firm and competitive advantage concepts are used as the theoretical foundation.•A large national database is used to test the hypothesis, and models are estimated via two-way cluster regression.•Three industry-specific operating performance measures are used: Occupancy rate, ADR, and RevPAR.•Findings demonstrate a curvilinear relationship between meeting space capacity and hotel-operating performance.