A more permanent working relationship between hotels and coworking providers like the one between Industrious and Wythe Hotel indicates sold-out room nights with traditional hotel guests are a long way away.
Enough people checked into hotels for their temporary office functionality rather than for vacation last year that one coworking provider is making the arrangement more permanent.
Industrious expanded its coworking membership platform to converted hotel rooms at the Wythe Hotel in New York City Monday, Skift has learned. The $300 per month program, called Oasis by Industrious at Wythe Hotel, allows members to use a hotel room-turned-office suite four times a month and tap into Industrious’ national network of more than 100 coworking sites across the U.S.
“We’ve created spaces that are comfortable, safe and functional for workers while our hotel partners help bring that extra element of warmth and service,” said Anna Squires Levine, chief commercial officer at Industrious, via email. “This ‘special sauce’ combination resulted in a really unique offering that has guests wanting to return to the spaces on a regular basis and is ultimately the best testament to the success of these partnerships.”
The Wythe launch builds off the growing hotel-as-office trend, where many hotel owners have offered up underutilized guest rooms as temporary workspaces to garner revenue during the catastrophic decline in hotel demand.
It also offers more privacy than a traditional office, where open floor plan designs aren’t conducive to social distancing in a global pandemic.
“A significant share of four-star hotels are situated in geographies also attractive to worker user bases,” said Brendan Carroll, a research director at commercial real estate brokerage firm Cushman & Wakefield. “It’s easy to see how a share of these hotels could be among the mosaic of options for businesses as workplace participation increases.”
The growing question in both the hotel and commercial real estate worlds regards the longevity of a partnership like this. Both the office and hotel sectors are struggling at the moment with uncertain outlooks regarding future demand, and partnerships between the two bring in at least some revenue at a time when it isn’t clear when, or if, occupancy rates get back to pre-pandemic levels.
Industrious and Wythe will share revenue made from the coworking agreement at the hotel. But does the work-from-hotel sector have a future in a normal demand environment? Maybe, experts say — if an experienced office provider is involved with the hotel.
“I see flexible office being a long-term viable option in the market, with work-from-hotel a likely niche industry,” Aaron Jodka, a managing director of research and client services at Colliers International, told Skift last year. “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 leadership team at the 70-room Wythe Hotel recognizes the boutique property is likely too small to enable a permanent coworking arrangement. The Industrious partnership will be in place for at least the next year. But the Wythe team does see the trend as a viable, long-term option for bigger properties.
“We expect to see a lot of companies who will need to gather their teams together after such a long period apart, and for companies who forgo a traditional office moving forward, offerings from Industrious and other smart and aesthetically aware companies will be vital,” said Peter Lawrence, owner of Wythe Hotel. “The reality is that Wythe Hotel is just too small for us to fully maximize our room revenue with office suites for the long term. But I think larger hotels will quickly find that thoughtful office options can support their room sales in new ways.”
A Working Relationship
The arrangement between Industrious and the Wythe Hotel comes after the coworking provider first launched a pop-up at the Brooklyn property last summer. The product became so popular that Industrious also launched a coworking partnership with Proper Hospitality, which converted rooms into work suites at boutique properties in locations like Austin and San Francisco.
The Brooklyn pop-up at the Wythe Hotel saw 30 percent month-over-month growth and a 40 percent guest return rate, Industrious claims.
The hotels-as-office trend exploded during the pandemic as a way to fill up empty hotel rooms with workers wanting something a little more structured and secluded than a home office. Companies like MGM Resorts, Hyatt, Mandarin Oriental, and Dutch hotel brand CitizenM all offered some variety of a work-from-hotel concept.
These offerings typically meant a day pass to use a hotel room for work during typical work hours. A Four Seasons “Conference Calls to Cocktails” overnight program in Boston included an end-of-work visit from its Trifecta Trolley roving cocktail bar. Marriott even offered a multi-day plan at some of its luxury hotels and resorts that included a business concierge and supervised activities for children.
But Industrious’ push into the hotels-as-office sector adds some legitimacy to the idea that hotels can be used as offices, especially at a time when many people are staying away from their traditional workplaces. U.S. office leasing activity was down nearly 40 percent as of the end of September, according to CBRE.
While the $300 per month coworking membership pales in comparison to the kind of nightly rates a Wythe guest room would have during a normal travel environment, it does boost the hotel’s profile on a national platform.
Members will have access to room service from the hotel’s Le Crocodile brasserie, printing services, a private bathroom, and 25 percent discounts on overnight stays. As many as four team members can fit in one of the suites.
“As many New Yorkers continue to work-from-home, there is a growing demand for flexible work-from-anywhere spaces,” Lawrence said.
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Photo credit: The Wythe Hotel is now offering Industrious-branded coworking suites in what were originally hotel rooms. Industrious at Wythe Hotel