April 11, 2019 |
It’s the whole gig economy thing. Millennials sitting about with laptops planning their futures, inventing a problem just to be able to solve it etc. It used to be that they hung about in coffee shops, then places like WeWork and India’s GoWork provided better desks, wifi and frankly better coffee to the point that now co-working spaces is a growth industry in itself.
A chap call Brad Neuberg is credited with starting the co-working movement in San Fransisco in 2005 and since then the growth in the number of spaces has been phenomenal as the chart below shows.
Forecast of co-working spaces globally. Source: Statista
It is predicted that there will be 21,306 co-working spaces globally by the end of 2019 with additional growth of 43% until 2022. So as far as the hospitality industry is concerned this continued boom in the requirement for spaces, from individuals through to corporates, can only mean additional revenue – as long as this is planned in properly and not just another ad hoc, revenue generator. ‘Move those plants John and we can get a couple of long tables in and charge people to sit there’ is not a co-working space.
There are some new brands getting in on the act. Letswork in the UAE has teamed up with hotels such as Rove to use their all day dining spaces as co-working spaces where programme members enjoy free wifi, drinks and a discount on their food. Win win for everyone as the hotel benefits from additional spend, digital nomads get to work somewhere apart from Starbucks and the co-working aggregator gets subscriptions.
If hospitality brands, during their concept development phase, considered the operational ups and downs of a particular venue they could build in some amazing secondary and tertiary revenue opportunities. As the corporate world continues to embrace remote working and indeed, in some cases, actively encourages it, the demand for flexible spaces will continue to grow. The figures above show this to be true but, apart from existing offices turning into co-working spaces, the opportunity to leverage this growth lies firmly in the hands hospitality industry.
The problem is that the hospitality industry, in the main, is outdated and reticent to change a business model that has worked for decades. Instead of culling or repurposing flagging brands, they develop new ones thus creating a brand portfolio that an FMCG company would be proud of. Hoteliers would rather keep an under-performing high end flagship brand than open it to secondary revenue opportunities such as co-working.
Not to say that hoteliers do not change. The impact of Airbnb on their market has led them to develop a number of mid-range brands that offer coolness and convenience to the millennial guest. But it was that way around, hotels were happy to wallow in their complacency without trying to see what consumer trends were forecasting and adapting their products to that. Even when Airbnb was launched, and probably even today, hoteliers dismiss its seriousness and longevity.
But they need to be aware that history could be repeating itself. Hoteliers lost room nights because of their failure to change and restaurants could lose revenue because they fail to plan for remote workers.
The restaurant of the future should be a multi-functional space that remote workers can use during the day and in the evening it keeps them by turning into a bar and restaurant. Keep the costs low by not having a kitchen, but make the wifi super-fast as nomads will want to use delivery services to order their food. Whilst this may be an exaggerated model, it is dramatically different from the ‘shift the trees and stick a couple of desks in’ approach which is popular today.
But, apart from a few brave souls, the majority of operators are happy to defend their brand position even though the financials suggest that they shouldn’t. This obstinance allowed Airbnb to enter an incredibly congested market and disrupt it successfully.
The hospitality industry can own the co-working space market but if it doesn’t realise that it needs to be building this product into and not around their basic offer then part 2 of its demise is in the reckoning.
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