How the Co-working Trend Creates New Opportunities for Hotels
The number of co-working spaces in the United States has grown at an average annual rate of 23% since 2010. In 2018 alone, an estimated 2,188 new co-working spaces opened worldwide and it is predicted that by the end of 2019 another 1,688 co-working spaces will open up.
Driving this trend is the increasing number of independent or free-lance professionals, who currently comprise 33% of today’s workforce and are estimated to account for 40% in 2020. Also, the percentage of people who work remotely is on the rise, with 63% of companies having remote employees. As the need for career flexibility expands, so will the need for co-working spaces.
With this projected growth, the hospitality industry is starting to recognize opportunities to tap into the co-working market and can benefit largely from transforming lobbies, business centers, and meeting facilities into co-working spaces.
Continue reading to find out how the increasing demand for co-working spaces is creating new opportunities for the hospitality industry.
Attract Millennial Travelers
With an expected purchasing power of $1.4 trillion by 2020 and comprising the largest portion of travelers, Millennials are the most heavily targeted audience for hotels. Because hoteliers know that Millennials are opting out of traditional office styles and are instead choosing cozy, inspiring workplaces, more and more hotels are trading the traditional business center for co-working spaces offering flexibility as well as social and networking opportunities.
Driven by globalization and the “gig” economy, Millennials are especially attracted to co-working facilities because of their desire for workplace and work style autonomy. Amidst the growth of ‘bleisure’ travel (a combination of business-related travel with leisure activities), Millennials classified as “digital nomads” (those who work remotely and use technology to communicate and perform their jobs) or free-lancers are more often than not looking for travel and excitement in the way they work. Hotel co-working facilities are a great way to satisfy these needs.
Millennials also value experiences. In fact, 72% of them indicate that they are more willing to spend money on experiences rather than material objects. By offering co-working spaces, hotels are able to tap into Millennial’s desire for experiences by providing opportunities for like-minded individuals to share ideas and discuss their talents, potentially resulting in new companionships and opportunities.
Generate a New Stream of Revenue
Hotel co-working spaces allow hotels to increase revenue while minimizing the amount of under-used facilities and maximizing their operating efficiency. While co-working spaces within hotels are usually offered to guests without an additional charge, local residents are often charged a membership or daily usage fee to utilize the space. Although these fees vary, the average monthly price for a dedicated desk in a co-working space is $387 and the average monthly cost for a hot desk (a shared desk or workspace) is $195. Hotels can implement these fees as an additional source of revenue.
Regardless of whether or not a fee is charged, hotels with these spaces are bound to see an increase in revenue from added traffic to the hotel’s coffee shop or bar. Caffeinated and non-caffeinated beverages as well as snacks rank as three of the top co-working space amenities. Conveniently, most hotels already have some type of snack area, which can help lure potential co-working enthusiasts to these spaces. Hotels can also combine access to co-working spaces with other amenities such as the fitness center to increase profits and make any fees more appealing.
As co-working spaces continue to gain in popularity, hotels can reap the benefits without having to overextend on budget. In most instances, the investment costs for a new co-working space will not be very substantial since the hotel is generally already equipped with the necessary components including WiFi, chairs, tables, wall outlets, and business services.
Differentiate in the Industry
Over the last decade, the hospitality industry has grown due to an increase in both business and leisure travel. This year alone, 479.5 million and 1,855.1 million people have traveled domestically for business and leisure, respectively. As the amount of travel increases, hotels are in constant competition to differentiate themselves amongst competitors. Offering co-working spaces is one way that hotel brands can make that separation.
Another way that hotels can differentiate themselves within the hospitality industry is by partnering with established co-working companies to continue bridging the gap between work and play. In addition to differentiating them from competitors, these partnerships will bring more awareness to the hotel and the other services and amenities that they provide.
Although the co-working trend is increasingly gaining traction within the hospitality industry, not all hotels have adopted it yet. However, adopting the hotel workspace trend during its embryonic phase is likely to help increase visibility to potential guests seeking professional and personal fulfillment during their stay. Hotel brands can also differentiate themselves by offering additional value-adds, such as hosting invited speakers for those who utilize these spaces or by creating unique concepts and models regarding the layout and visuals used within the space.
To fully take advantage of the opportunities that the co-working trend has created, hotels must develop an appealing space that provides more than just a place to work. These areas must complement the hotel’s brand while satisfying the needs of guests and local users of the co-working facilities. Successful hotels will find the right balance between co-working spaces and offering amenities, fees, and decor that make sense for both guests and visitors.
Read How Corporations Are Driving Demand for Coworking Space to learn more about the impact of the coworking trend on commercial real estate.