The COVID-19 pandemic continues to impact the entire spectrum of the Asia Pacific property market.
 
Restrictions on mobility and implementation of social distancing policies have placed considerable attention on hotels and dampened the momentum of the ‘hotelization’ trend of other traditional asset classes like office, retail, and residential.
 
Viewed in isolation, these spaces will continue to feel stress for the foreseeable future, but when hotels and co-working spaces are considered together, do they provide complementary, medium-term solutions to their respective challenges?
 
The more I look at both markets across the region and the destabilization brought to both sectors by COVID-19, re-imagining the partnership between hotels and co-working spaces could be a mutually beneficial solution.
 
In fact, this partnership was a trend that was taking hold well before the current downturn and is poised to accelerate.
 
This begs the question, where do we see the opportunities for more collaboration between the hotels and co-working sectors?
 
Hotels as flexible working and social spaces
 
Hotels are naturally social places.
 
Beyond accommodation, hotels have long acted as a hub for travelers and the local community to meet, dine, celebrate and mingle.
 
Larger hotels typically offer a suite of amenities to attract travelers and the local community such as bars, restaurants, event spaces, lounges, pools, spas and gyms.
 
The experience is centered around the hotel lobby which has evolved to be the focal point of social interaction and is commonly used as a space for business travelers to unwind with their laptop after a long day, perhaps with a bite to eat and a refreshing beverage.
 
Furthermore, the services of a business center are a ubiquitous amenity at hotels that guests have come to expect.
 
Synergistic effects of sharing the same roof
 
Considering the offerings already available within a hotel, space dedicated specifically for co-working seems to be a natural extension for some hotels.
 
What’s the benefit to both providers?
 
Few commercial buildings offer the in-place operations, kitchen space and leisure amenities that hotels naturally possess, and if done properly, there should be synergistic effects for the stakeholders of both the hotel and co-working space.
 
From the hotel’s perspective, they stand to benefit from rental and/or profit sharing income from the co-working operator as well as potential demand for services related to the occupiers of the co-working space (room nights, food & beverage spend, event bookings for product launches, etc.).
 
On the flip-side, the co-working operator benefits from being able to leverage from the environment and facilities of the hotel such as valet parking, restaurants, catering infrastructure, and other amenities.
 
As hotels are already operational in nature, they can potentially offer more opportunities for complexing existing positions at the hotel to service the co-working space and increase labor efficiency.
 
The flow of business aligns well as hotels’ restaurants and public areas are generally more active in the mornings, evenings and on the weekend whereas peak office occupation happens on weekdays during working hours.
 
Then there is the user experience to consider.
 
From the user’s standpoint, co-working customers can access the various conveniences of the hotel and its facilities.
 
For hotel guests, if provided access, they benefit from having an enhanced communal working space which could be packaged into the room rate or offered to guests on a day-rate basis.
 
Potential challenges and risks
 
The relationship between the hotel and co-working space needs to be managed properly to maximize the synergies.
 
Both parties would certainly want to avoid a situation wherein the hotel operation disrupts the co-working operation, and vice versa.
 
Additionally, in the near-term, the prospect of staffing up a co-working operation amidst social distancing and work-from-home measures creates another barrier.
 
However, as markets around the world slowly return to work, the business case should make increasingly more sense.
 
Future opportunity
 
Following a surge in popularity of co-working, the risks of the operational model have been laid bare in recent times.
 
As an asset class well-acquainted with operational risk, hotels are uniquely well suited to support a co-working operation.
 
Furthermore, co-working spaces have the potential to enhance hotels’ existing operations.
 
It is too soon to tell what a post-COVID world will look like for travel and co-working; however, during these times, building owners will most certainly be scouring for new ideas to optimize their properties and enhance returns.
 
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