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Difficulty Making Profit from Hotdesk Memberships

OpenWork highlights how a decade ago, coworking spaces or shared office communities commonly consisted of one form of membership (similar to that of hotdesks) and pricing truly reflected the value of such membership. Yet, 10 years later, larger coworking companies pride themselves on a variety of memberships including private office space and fixed desks. As this has happened, the price of hotdesk memberships have hiked closer to that of fixed desks, but unfortunately the benefits of hotdesk memberships have failed to rise at the same rate. Many mobile workers therefore buy into the membership with high expectations, but leave with low levels of customer satisfaction.

For this reason, OpenWork frequently recommends that coworking spaces lower the price of their hotdesk membership to $99 per month (in the U.S.), to better manage member expectations and as a result, decrease churn rates. Despite the protection of effective pricing, hotdesks will arguably always experience higher churn rates than private offices due to the greater degree of flexibility required by the mobile workforce.

Secret Ingredient of Success for Coworking within Hospitality

As we cannot assume too much about the failures of traditional coworking, we must turn to the opportunities presented by the hospitality industry. KettleSpace Co-Founders, Daniel Rosenzweig, Nick Iovacchini and Andrew Levy, formed a team strong enough to pinpoint the key ingredient of success for coworking within hospitality. Whilst Rosenzweig has invaluable financial insights as a former real estate employee for one of the world’s largest coworking companies (underwriting 4.5 million square feet in 35 cities), Iovacchini is an established expert in the consumer product space as a restaurant owner and Levy has built multiple accelerator programmes as a former Twitter employee.

Rosenzweig states that “an asset light business model is the way forward. Traditional coworking requires a large amount of capital and carries high construction costs. The only way to achieve an asset light model with traditional coworking is to persuade the landlord to cover construction costs. However, this takes a very long time. Hence, we decided to leverage underutilized hospitality assets with no costs at all.”

Coworking within hospitality is not only built on the premise of being asset light, but also upon growth of the ‘coffee shop culture’. Starbucks may have started the trend, but there has been an explosion of boutique coffee shops, hotels and restaurants. Many possess large spaces with perfect work facilities, yet they suffer from slow service periods with empty space or they battle with laptop workers who jeopardize table turning rates.

Hospitality Brands Jump Onboard

Whilst coworking technology platforms may provide solutions to the problems above and utilize an array of boutique brands, the larger and more corporate hospitality brands are managing their own coworking facilities. CNN Travel recently released a list of smart business hotels with attractive workspaces to accommodate the mobile workforce, which is expected to form 42.5% of the workforce worldwide by 2022. Hotels declared by CNN as fit for business travel offer workspace as an added benefit for customers, whereas other hotels are creating coworking businesses for public membership.

The Commons Co-Op, by Virgin Hotels, launched as a new entrant to the coworking market in early 2017. They may not be asset light, but they capitalize on existing space and offer a coworking membership of $55 per month; a rate at least 75% less than the average hotdesk membership. It’s notable that many health clubs also have business lounges and it may not be long until they are similarly transformed into coworking businesses.

Will Hospitality Coworking Eradicate the Traditional Hotdesk?

Coworking within hospitality is still an extremely new trend with many businesses having opened in early 2017. The number of technology platforms utilizing hospitality space certainly suggests there’s an emerging market, with Virgin Hotels taking steps in the right direction. Whilst the likes of KettleSpace are excited by the global opportunity to penetrate dense urban environments (typically targeting cities with high living costs), OpenWork signals caution. Despite lower price points and greater flexibility, hospitality coworking businesses could face similar consumer challenges to traditional coworking hotdesks. Will membership be worth the benefits compared to working where you like at the price of a couple of lattes?


Our author Megan Hanney reports on global coworking trends having launched 3 coworking spaces throughout London and Spain. Follow @megan__hanney.

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