Hotels in China are experimenting with their own co-working spaces to attract short-term tenants. Source: Shutterstock

Hotels in China are jumping in on the co-working action

HOTELS are taking a page from co-working spaces’ book by getting in on the shared workspaces as a way to maximize profits by tapping into the city’s thirst for short-term office space.

Co-working has kicked off all over China and operators are all raring for a piece of the huge market opportunity posed by the millions of workers and freelancers in the country. A new trend has emerged where hotels offer in-house co-working spaces as a way of setting themselves apart from traditional “suit-and-tie” hotels, Hotel Jen communications director Cindy Liu told South China Morning Post

“The idea was hatched a few years ago when the hotel was designed. At that time co-working was in its nascency, but we found that it fitted well with our emphasis on ‘community’,” she said in an interview with the Hong Kong-based outlet.

The Beijing hotel, which is owned by Shangri-La Hotels and Resorts, launched its Prototype co-working space for startups and freelancers. The space occupies an entire floor, and it’s the first of its kind for Shangri-La. The new trend has become a signifier of “trendiness” for hotels, as well as the latest development in a real estate craze that has caught the imagination of consumers and businesses in major Chinese cities.

“The fast growth of co-working in China is leading more landlords to evaluate the benefits that co-working can bring to their properties to keep occupancy levels up. But this is still in the nascent stage,” JLL’s North China research head Steven McCord said to SCMP.

Co-working spaces have had to contend with managing the costs of their spaces alongside occupant lists that are constantly in flux. Membership usually relies on a month-to-month or yearly subscription, and how crowded a space is can depend wholly on the time of month.

This is the reason why so many operators rely on large tenants – usually branches of established firms, or small companies – rather than the shifting needs of freelancers in order to pay the bills.

“Co-working provides companies with more flexible and short-term office rental scenarios than traditional office. These types of scenarios are enticing to smaller companies and companies with fast or unpredictable growth,” said Brandon DeWitt, head of workplace strategy at CBRE China, to SCMP.

According to Colliers International’s Flexible Workspace Outlook Report 2017, only 2.3 percent of co-working spaces in Beijing’s central business district was occupied, suggesting that co-working spaces still make up only a tiny fraction of office spaces in the city. Co-working spaces could work towards growing small startups into larger occupiers – cultivating a little loyalty on the way up – thus producing a serious business opportunity for landlords all over the city.

Co-working spaces are no longer just about the office, but about the localized communities. Source: Common Ground

Despite rising demand for co-working spaces, being a full-fledged operator might not be as lucrative as it may seem but as Liu’s comments suggest these hotels don’t want to set up these spaces as a cash cow but rather as a sweetener to attract tenants and boost their reputation. The cost to the hotel is relatively little at the price of a floor of rooms and hotels already have the space as it is which can be put to good use.

In fact, the model works much better as a form of hot-desking, meaning that members pay a fee for access to the space and are able to move around any available space.

Health foods startup Well and Fit, which sets up shop in Prototype, said that it worked well for their tiny team who were largely occupied with out-of-office meetings in the surrounding area.

“I can work in other co-working centres but the problem is you usually need to pay three months of rent at one go,” said Well and Fit founder Frank Zhang.

“I can also go to cafeterias or bars but they are often crammed, crowded or chaotic. The Wi-fi is slow, and power sockets are few. You can work at the most, two or three hours and leave,” he said.