A work-from-hotel strategy enables hoteliers to generate revenue while awaiting a travel industry recovery — and the alternative use could survive beyond a business rebound.
Co-working provider Industrious partnered with Proper Hospitality in bringing the work-from-hotel concept to Proper Hotels in Austin, San Francisco, and Santa Monica in late September. The partnership expands in southern California to Proper’s Hotel June and Avalon brands next week.
Guests still avoiding the office but looking for a place to work away from home can book a suite by the day, week, or month, with weekly and monthly reservations coming at a 15 and 25 percent discount, respectively.
The Industrious partnership comes amid companies like MGM Resorts, Mandarin Oriental, and Dutch hotel brand CitizenM offering their own spin on the work-from-hotel concept.
But a partnership with an actual co-working provider like Industrious hints the hotel-office relationship may be more long-term than some may expect.
“The gold-standard for partnerships in Covid are the ones that solve an immediate need for customers right now but also set up for something you think is going to be relevant for a long time to come,” said Industrious CEO Jamie Hodari. “I do think there are going to be elements of this that will end up existing for a long time.”
Hoteliers around the world continue to grapple with record-low occupancy rates due to the coronavirus pandemic. Meanwhile, many workers continue to stay away from the office due to a limited number of private offices after years of migration toward open-floor concepts — a layout not exactly conducive for social distancing.
The Industrious at Proper Hotels program converts hotel suites into private workspaces with the amenities expected at both a hotel as well as an Industrious office.
Guests can utilize contactless check-in upon arrival. Once they get to their suite, workplace amenities include high-speed Wi-Fi, unlimited access to The New York Times, printing services, and room service for purchase. Day bookings run from 8 a.m. to 6 p.m., but even those guests can utilize hotel amenities like the fitness center and pool.
“Obviously, times like this force us to get more creative in how we repurpose our spaces for what demand we can see,” said Patrick Pahlke, vice president of commercial at Proper Hospitality. “As the travel industry keeps on changing, it’s our job to adapt to those changes and meet the needs of our guests.”
Hotel rooms as private offices may seem like a short-term gimmick or niche product, but the flood of hotel companies entering the sector indicates the industry sees office use as a viable revenue stream to make it through the pandemic.
“Many employees are tired of working remote. It has been six months for millions of workers at this point, and that is wearing on individuals’ mental well-being and productivity. People are looking for a change of scenery, and work-from-hotel is providing that outlet,” said Aaron Jodka, a managing director of research and client services at Colliers International. “It is a win/win for the hotel industry and workers. Workers are looking to change up their work environments, and hotels are looking to fill the void from lower occupancies.”
Mandarin Oriental offers its “Work From M.O.” day-use program at hotels around the world like New York City, Miami, and Hong Kong. CitizenM’s corporate subscription service allows guests to use hotel common areas as a form of coworking space while also including three nights each month of guest room use as part of the membership.
The Proper Hospitality and Industrious partnership is notable for bringing in an experienced provider in the office sector rather than the hotel brand attempting it on its own.
But Proper leaders see the pairing as an extension of their own lifestyle brand. They began to look for a workplace provider partner after noticing mid-week occupancy tick up in recent weeks with guests looking to simply use various Proper Hotels’ outdoor space as a place to work, Pahlke said.
“Going back to our own brand first, we pride ourselves on being a lifestyle brand that provides a high level of guest service and comfort in really cool environments,” he added. “The same is really true with this partnership because of the workspace we’re offering to our guests. Industrious has proven to be one of the leaders in providing well-designed and cool workspaces.”
Industrious was similarly drawn to Proper Hospitality for the degree of similarity between the two companies.
“[We decided] let’s be scrappy and pick a mid-sized hotel brand where we can get something done in a matter of weeks and where there’s no question of brand alignment and not months of deliberating [service-level agreements] and things like that,” Hodari said.
Industrious launched a pilot program in July at the boutique Wythe Hotel in Brooklyn, and the program has been extended indefinitely. Since the launch, many hotel companies of all sizes have reached out about a potential partnership, Hodari added.
While Industrious chose Proper Hotels for its first hotel brand partnership, a bidding process is under way for a deal with larger, national brands that Hodari was not ready to announce during an interview with Skift.
A Long-Term Relationship or Pandemic Fling?
Just as there is debate on the longevity of work-from-home policies following a pandemic recovery, there is similar discourse on whether a work-from-hotel platform would last once occupancy rates rebound to 2019 levels.
But it may be a formalized product like the one Industrious and Proper Hospitality formed that lives to see the other side of the current downturn.
“I see flexible office being a long-term viable option in the market, with work-from-hotel a likely niche industry,” Jodka said. “If hotels can partner with established, well-recognized flexible office space providers, there are opportunities for this to carve out a post-pandemic niche in the market.”
The hotel industry isn’t the only one watching how work-from-hotel concepts fare with the general public. Traditional office providers see interest in the product as a leading indicator people want to get back to a workplace away from their own home.
“In office real estate, we are optimistic this is a sign that office attendance will continue to return to much higher levels than may have seemed likely earlier in the year,” said Brendan Carroll, a research director at Cushman & Wakefield. “Many hotels are in the right geographies and possess the right amenities to offer a level of solution, potentially long-term.”
But for work-from-hotel concepts to continue beyond an industry recovery, hotel operators would have to find a way to make their work-from-hotel offering meet daily rates.
Industrious day rates at the San Francisco Proper run between $134 to $399 compared to $177 to $450 nightly rates seen online for Oct. 12. For now, the Industrious partnership runs through mid-December, but Proper Hospitality is open to keeping the relationship alive.
“It’s hard to predict anything these days, but if we see a demand for this type of experience continuing, then we definitely look forward to providing it as we move into 2021,” Pahlke said.
[UPDATE: Following publication, Proper Hospitality and Industrious adjusted the timeline for the partnership’s expansion to additional brands. This story has been updated.]