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Why coworking is coming to hotels

As coworking continues to grow in popularity in cities around the world, hotels are increasingly looking for a slice of the market.

February 21, 2019

It’s not just offices that are adapting to new, flexible ways of working and an increasingly mobile workforce.

Growing numbers of hotels are also looking to get involved in the flexible space boom, transforming underused spaces in communal areas or outdated business centers into modern, vibrant coworking spaces.

The Virgin hotel in Chicago has a monthly membership model for its coworking space, the Virgin Commons Club, which includes a bar, private meeting areas, free drinks, a library, Wi-Fi and wireless printing. The lobby of the Ace Hotel in New York attracts coworkers with its plentiful outlets, communal tables and a lobby bar that serves Stumptown coffee and gluten-free brownies.

These spaces are designed to appeal to a broader group of workers, not solely high-flying international business executives looking for a quiet spot to answer emails. As more companies adopt flexible working policies and grown-on-the-road startups and freelancers account for a larger proportion of the workforce, demand is growing for places that enable people to get their work done in a social setting and create a sense of community.

“From a hotel standpoint, it could be a big opportunity,” says Lauro Ferroni, who directs capital markets research at JLL. “Coworking is in high demand, so any thoughtful attempts from hospitality operators to capture some of that demand are likely to be fruitful.”

A new type of hotel lobby

The hotel lobby is a prime area to transform into a coworking space. Hotels get extra revenue during traditionally quiet weekday morning and afternoon periods, and people looking for space to work get comfortable furniture, power outlets, free Wi-Fi and readily available food and drink.

Some pioneers of the hotel-lobby-as-workplace, such as New York’s Ace Hotel, do not charge coworkers a fee. These hotel operators see the business case for doing so – it encourages more traffic to onsite bars and coffee outposts, while simultaneously encouraging “brand awareness,” Ferroni says. In other words, someone who works out of an Ace Hotel lobby in New York City and has a positive experience may be more likely to one day book a stay at an Ace Hotel in, say, Shoreditch, London.

“There’s a natural confluence between coworking and hotels,” says Tom Carroll, Head of EMEA Corporate Research at JLL. “The hospitality industry is all about providing high-quality service and amenities to create a good user experience – and that’s what today’s workforce is increasingly coming to expect from the spaces they work in, whether that’s a traditional office, a hotel lobby or a coworking outlet.” 

More hotel groups are now adding their own offerings to the mix. At the trendy Moxy by Marriott, revamped common spaces designed specifically for lounging and working are available to both hotel guests and the public. Similarly, the Sheraton chain is reportedly revamping more than 400 existing lobbies so that each one will be outfitted with a “productivity table” that includes outlets, USB ports and rentable drawers.

Some hotels go a step further in promoting their co-working credentials.  The Hobo in Stockholm even features an area called SPACEby for entrepreneurs who work in the lobby to showcase their products. 

The pay-to-stay model

Not all hotels, however, are offering space for free. Some operators have monetized work-friendly spaces in a model that is more akin to traditional coworking.

The Hotel Schani Wien in Vienna offers a 10-day coworking pass to its lobby for the equivalent of about US$100. The Virgin hotel in Chicago charges a monthly membership fee to the Virgin Commons Club.

At NEST, a coworking space in the Hotel Tryp by Wyndham in Dubai, paying coworkers can use the gym, swim in the pool and drink unlimited coffee, all while confabbing with other creative types in a chic flex-work environment.

Other hotel groups, such as French hotel brand Mama Shelter and Selina, a hotel company operating in Miami and Latin America, are using their coworking spaces to target “digital nomads” as hotel guests, Ferroni says.

“Brands targeting younger generations of travellers are more likely to offer the coworking element as part of the hotel experience itself,” he adds.

Recipe for success

While coworking is certainly growing in popularity, it’s not the right move for every hotel.

“It’s about more than simply providing a convenient place to work,” says Carroll. “Coworking areas need to be able to create the right environment which fits with both the hotel’s brand and the needs of people using the space to deliver a successful service.”

Ferroni advocates for making sure that all the right components are in place, from private spaces to a strong Wi-Fi connection.

“Anything related to technology is critical -- there should be the same quality Wi-Fi connection as would be available in a Class A office building,” he says.

There’s also the balancing act of creating a lively atmosphere for non-working guests and a peaceful one for those trying to hammer out a PowerPoint presentation.

“There do need to be quiet spaces, and operators have to think through sound elements like music,” he says. “Is the space quiet enough? If so, how do you make it cool? Is there a focal point centerpiece, an art installation of any sort?”

As long as the essential functions of a hotel are not sacrificed because of coworking offerings, hotel owners and operators can only stand to gain in the long-term.

“Flexible space is a young, competitive and fast-growing market,” says Carroll. “The increasing presence of hotels in the coworking space adds another element of diversity but it remains to be seen how it will play out in the coming years.”  

Some hotel owners are hesitant to jump on the coworking trend as they continue to focus on monetizing their dedicated meeting spaces, Ferroni says. 

“It’s important that whatever else is happening doesn’t slow down how people interact with the hotel more traditionally, so there is still enough focus on room management and operation,” he adds. “A lobby should feel activated and functional at the same time.”

Yet that doesn’t exclude further innovation from hotels looking to differentiate themselves in the coworking space.

“More experimentation into the paid model could lead hotel operators to open up other spaces within the hotel to workers,” he says. “With coworking being one of the largest sectors driving net absorption in the office space, there’s reason to expect the demand is there.”

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