Skift Take

Coronavirus threw traditional work and travel patterns into disarray last winter, forcing people to stay at home. But this time around concerns over sky-high energy bills could push people into co-working spaces to keep costs down.

Series: Future of Work

Future of Work

As organizations start to embrace distributed work and virtual meetings, the corporate travel and meetings sectors are preparing for change. Read Skift’s ongoing coverage of this shift in business travel behavior through the lens of both brands and consumers.

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As the energy crisis sweeps across Europe, including planned state interventions on the cards, more companies are predicted to turn to co-working spaces.

Electricity bills are about to surge, partly due to the instability in the world’s energy market caused by Russia’s invasion of Ukraine. Now the likes of IWG, WeWork and others are seeing a big uptick in new memberships.

At the same time, employees may also now opt to leave the comfort of their own homes to slim down their electricity bills.

Home Truths

Out-of-town co-working locations are in demand, in particular for those employees that moved away from city centers during the pandemic.

“Our research found that 77 percent of UK office workers say that an office close to their home is a must-have for their next job, and they are four times more likely to choose an employer offering an office close to home, rather than purely in a city center,” said Mark Dixon, founder and CEO of IWG, which operates brands including Spaces and Regus.

“We expect rising bills at home to further accelerate this preference for local working.”

IWG plans to add 1,000 new locations globally in 2022, with the majority of these in suburban and rural locations. Its overall network has also grown by two million customers in the last year.

International co-work space aggregator Deskpass is seeing a similar trend.

“We expect a surge in demand as both heating and electricity costs skyrocket across Europe, making it expensive for work-from-home employees to subsidize energy costs on behalf of their employers,” added Sam Rosen, co-founder and CEO.

“In the U.S. we’ve seen a similar phenomenon whenever there is an extended electricity blackout making work from home untenable. For example, last year there was a weeklong blackout in parts of Dallas and we saw a huge spike in bookings that week.”

Cost of Living Meets Tourism

But the phenomenon isn’t that new. Pensioners in the past have become so-called “energy tourists,” especially in chillier places like the UK, heading to warmer countries like Spain during the winter months to save on heating costs. In some cases it’s a necessity rather than a luxury.

Some travel agencies are even promoting this idea, targeting people that can take advantage of flexible working. “It’s going to cost us all this year more to heat our homes this winter, so why not fly off somewhere warmer instead?” suggests one campaign, called The Heat is On, launched by UK travel agency TravelTime World.

Average spending on utility bills has risen 45.2 percent in the past 12 months in the UK, according to Barclaycard’s latest consumer confidence survey, carried out in August. That growth was greater than the increase seen in July (43.9 percent) and June (39.6 percent.)

“Higher prices have led 93 percent of consumers to feel concerned about household bills, with 45 percent of this group also reducing energy consumption at home to help combat increasing costs,” the report said. “Concerningly, 28 percent feel their personal finances are currently not sufficient to cover their energy costs, and looking ahead, this rises to 39 percent when factoring in the upcoming energy price rise in October.”

However, its survey was published shortly before the UK government announced it would cap average household energy bills at $2,870 a year for two years from October.

Businesses receive “equivalent support” — but only for six months.

AndCo, which offers desk space membership at venues including hotels and cafes, said it was already seeing companies downsize due to energy bills.

“There is great value attributed to having certainty when booking a desk spot and given the inherent structural advantages that hotels deliver, like product consistency, a front desk and a concierge service,” said CEO Sanj Mahal.

A spokesperson for WeWork said the company couldn’t predict how its members will react to rising bills, but it had seen a jump in people returning to its buildings over recent months.

Bookings for its most flexible schemes, All Access and On Demand, are up globally, compared to July and August in the prior year, with London now its highest booked market.

“More people in London returning to the office during the first two weeks in September, with keycard swipes increasing 81 percent year-on-year compared to the same period in the year prior,” they said.

Further ahead, some experts argue extreme weather conditions due to climate change could produce unusually cold or long winters, prompting more businesses to look carefully at their office outgoings.

Sidenotes

A dark side to the co-living movement has been exposed in a report this week, following an investigation by Vox into alleged assaults that took place at Launch House in Los Angeles. Its CEO and co-founder issued a statement on Sept. 12.

Launch House, which offered a live-in residency at Paris Hilton’s former Beverly Hills Mansion, describes itself as a “multidimensional social space for the next generation of founders, engineers, creators and others building the future,” and in February this year raised $12 million in Series A funding from Andreessen Horowitz.

Skift recently covered the rise of new hostel-like venues with an entrepreneurialism focus. While the allegations have been refuted, could the negative media harm their appeal?

“The co-living, digital nomad scene is incredibly exciting, with the opportunity to live somewhere new and buzzy. It ticks a lot of boxes,” said Carolyn Pearson, CEO of travel risk management and personal safety consultancy Maiden Voyage.

“But there can be a cult-like culture in these types of programs where work becomes everything and outside interests, non-entrepreneur friends and family get left behind. If people are cohabiting as well, this will become more extreme. Like society as a whole, you are going to have a percentage of bad eggs and it’s naive to think otherwise.”

In its statement, Launch House said new safety-focused initiatives include “moving into new houses outfitted with more state-of-the-art security systems, implementing more formal background checks and rolling out official scholarships and channel partnerships to increase diversity of our membership.”

Pearson, who has previously participated in an accelerator program, said these were essential, and that  residents and tenants also needed to do their own due-diligence before moving into to these kinds of places.

“It’s a wake up call for cohorts of entrepreneurs in the U.S. mostly, and all over the world,” added Goncalo Hall, founder of NomadX. “It’s worrying for all the startup and entrepreneur programs who may feel a backlash of that toxic culture.”

However, for the wider co-living space sector, he doesn’t think it will make a difference as the report paints a picture of a “world that is not common for the nomad and nomad co-living community.”

10-Second Corporate Travel Catch-Up

Who and what Skift has covered over the past week: Amadeus, Air India, El Al, Expedia, Frontier Airlines, Sabre, Sonder, United Airlines.

In Brief

Airbnb Showcases Remote Work Benefits

Airbnb has has released a new policy whitepaper, to help governments and destinations economically benefit from the rise in remote workers. The publication, called “Airbnb’s Guide to Live and Work Anywhere,” suggests tactics calls for low-cost and expeditious remote worker visa programs, proposes model tax and financial incentives for remote workers and employers, and recommends essential amenities like internet connectivity and community support for workers and their families.

The policy report includes a case study on Tulsa, Oklahoma, which showed that every dollar spent on local incentives resulted in $2.38 of new induced labor income in the city. The city is currently playing host to the Build In Tulsa Techstars Accelerator program.

Long-term stays of over 28 days continue to be Airbnb’s fastest-growing category by trip length, and have more than doubled since the first quarter of 2019. Airbnb CEO and co-founder Brian Chesky will be speaking at next week’s Skift Global Forum.

Travel Agencies Push Sustainability Agenda

Corporate travel agency CWT and Expedia are ramping up efforts to showcase their greener sides.

CWT has joined the Global Sustainable Tourism Council, a non-profit organization created by United Nations agencies and conservation agencies to establish and manage global standards for sustainability in travel and tourism. CWT will become an active contributor to the work it delivers, as it promotes adoption of universal sustainable principles. Expedia, meanwhile, has launched its own global social impact and sustainability strategy, as part of its Open World technology platform. It aims to tackle inequities in travel, accelerate meaningful change for the mosaic of travelers and communities that power the global industry, and ensure a healthy planet, it said.

“Travel needs to lighten its footprint on the planet, and everyone should be able to experience it and receive the associated benefits,” said Peter Kern, vice chairman and CEO of Expedia Group — who will also be speaking at next week’s Skift Global Forum. “Now is the time to innovate the existing model. We have a responsibility to enable a stronger, more sustainable industry,”

Tags: airbnb, business travel, climate change, coronavirus recovery, corporate travel, cwt, energy crisis, expedia, Future of Work Briefing, iwg, remote work, Skift Pro Columns, techstars, travel management, ukraine, wework