Hotels latest industry to lease co-working space

The co-working office space concept has become so popular in recent years, that commercial real estate owners have begun to cut out the middleman and start leasing flex space to businesses on their own.
Now, another industry is following CRE owners’ lead and doing the same thing—hotels.
According to property consultancy company, JLL, the number of hotels looking to take part in the flexible space phenomenon is rapidly growing. Numerous hotels are planning to turn unused spaces in common areas or outdated business centers into new co-working spaces.
For example, the Virgin hotel in Chicago offers monthly memberships for its co-working space, Virgin Commons Club. The space comprises a bar, private meeting areas, free drinks, a library, Wi-Fi and wireless printing. Meanwhile, the lobby in the New-York based Ace Hotel offers workers outlets, communal tables and a lobby bar that serves coffee and brownies.
The spaces these hotels created are meant to attract a more diverse group of workers, not just business executives looking for a quiet place to work. Hotels see this as an ideal time to move into the co-working arena because more companies are implementing flexible work policies and mobile startups and freelancers are making up more of today’s workforce. These factors have made the demand for places where people can work in a social setting and create a sense of community stronger than ever.
“From a hotel standpoint, it could be a big opportunity,” JLL capital markets research director Lauro Ferroni said. “Co-working is in high demand, so any thoughtful attempts from hospitality operators to capture some of that demand are likely to be fruitful.”
Hotel lobbies mark one spot that are being turned into co-working spaces, according to JLL. Hotels can collect additional revenue during usual quiet times like weekday mornings and afternoons by providing people looking for somewhere to work that has comfortable furniture, power outlets free Wi-Fi and food and drinks. Places like the Ace Hotel are not charging co-workers, believing the traffic to their bars and coffee shops can help build brand awareness and if someone working in their lobby has a good experience, they’ll be likely to stay at another location in that chain.
“There’s a natural confluence between co-working and hotels,” Tom Carroll, Head of EMEA Corporate Research at JLL said. “The hospitality industry is about providing high-quality service and amenities to create 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 co-working outlet.”
Other hotels that are providing their own offerings to the co-working mix include Moxy by Marriott that revamped common spaces designed specifically for lounging and working, which hotel guest and the public can use. Meanwhile, Sheraton’s chain is changing up more than 400 of its lobbies so each one will have a productivity table that has outlets, rentable drawers, and USB ports, according to JLL. The Hobo hotel in Stockholm has a dedicated area called SPACE by where entrepreneurs who work in the lobby can display their products.

Other hotels are charging to use their co-working spaces, however. The Hotel Schani Wien in Vienna offers a 10-day co-working pass for its lobby that costs about $100 U.S. dollars, while the Virgin hotel in Chicago charges a monthly membership fee to its Virgin Commons Club. The Hotel Tryp by Wyndham in Dubai’s co-working space, NEST gives paying co-workers access to its gym, swimming pool, and coffee while they interact with other creative professionals in a modern work environment.
“Brands targeting younger generations of travelers are more likely to offer the co-working element as part of the hotel experience itself,” Ferroni said.
Co-working spaces are quickly growing in popularity, but the concept might not be a perfect fit for every hotel, according to JLL. Carroll points out offering co-working space is more than just giving people a place to work.
“Co-working areas need to be able to create the right environment which fits both the hotel’s brand and the needs of people using the space to deliver a successful service,” he said.
For a hotel to successfully implement a flexible office space, it must have the right components in place, including 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,” Carroll said.