Part 1 of 2
Meeting rooms are not only a coworking space’s most profitable asset per-square-foot, they also represent one of the largest opportunities for growth, according to industry experts.
Coworking and serviced workplace operators with rooms that can accommodate groups of 20-40 have a golden opportunity to add a new revenue source by hosting corporate training meetings, according to Frank Cottle, chairman and founder of the Alliance Network.
Dedicated business centers are poised to capture significant business in this arena by:
- Capitalizing on growing corporate mandates for innovation and education.
- Offering a superior alternative to hotel meetings.
- Leveraging existing location, atmosphere, facilities, and service.
Growth in Education Fuels Training and Meetings
The pace of business is driving the necessity for continuing education, according to Chris Kelly, president and cofounder of Convene.
“We see a much greater frequency of teaching and learning than we have in the past. Acceleration is driving more teaching, more collaboration, more frequency, and more volume,” said Kelly, whose brand specializes in offering premium meeting and event spaces and flexible workspaces with a significant emphasis placed in hospitality.
The Business Case to Pursue Offsite Meetings
“Large meeting spaces are the most expensive to build and maintain. They’re also the least utilized,” Kelly noted.
“Corporate America wants to get rid of these rooms since they’re only used once a month,” agreed Cottle. With usage as low as once a quarter or twice a year, outsourcing space makes much more economic sense.
And this presents an opportunity for the flexible workplace industry.
“Our industry is more cost effective,” said Cottle, particularly if the space is designed to drive maximum revenue.
Meeting room revenue can be up to three times the revenue per square foot of a permanent office, Cottle estimates, making it worthwhile for operators to offer their meeting and conference rooms to non-members.
Steve Golding, founder of the online meeting room reservation platform, Meeting Hub, agrees with Cottle that meeting rooms are the most profitable space in your center.
Golding relates that current day rates for meeting space can hit US $1,200-3000 per day (Seoul) to £1,200-1,300 per day (London).
“Now, is there anywhere in the world where you can fill an office with five chairs for about £1,400-per day?”
Not only can soliciting medium-size meetings provide an additional revenue source, it can also improve space utilization.
Cottle estimates that the average occupancy for meeting rooms in coworking spaces is 35%-40%, leaving ample room for growth. “You can probably go up to 65%-70% occupancy before you hit any type of scheduling issue,” he said.
Advantages over hotels
Centers that maintain large meeting rooms often must go beyond their own membership to amortize the investment, according to Cottle. However, this can work to their advantage as it presents a lucrative opportunity.
“There’s a gap in spaces that serve 20 to 40 people,” Cottle explained.
Equipped with numerous advantages and infrastructure, coworking and serviced offices provide the flexibility to service this particular marketplace. Flexible workspace operators offer numerous advantages over hotels when it comes to meeting rooms.
- Natural light. Since hotels are typically designed to maximize daylight in bedrooms, meeting rooms are often relegated to less palatable alternatives such the basement. In comparison, since natural light is well-documented as a major contributor to worker productivity and satisfaction, today’s offices are often designed to bring daylight into the office environment, meeting rooms included.
- Focused service. Hotels are in the business of renting rooms and large-scale catered events. (See the figures below for a comparison of revenue streams of hotels vs coworking spaces). “They’re not really focusing on servicing the meeting or conference room in use,” said Golding. “A business center with four, six or eight meeting spaces may have a dedicated customer service representative that focuses on looks after the meeting rooms. That’s creating a very different experience not just for the person that’s booking the space, but for the people who are attending that event.”
- Ancillary support. Services in a hotel are focused on serving overnight guests and event patrons. They may have very little support staff geared toward business meetings. On the other hand, flexible workplace operators already have the infrastructure in place to provide secretarial services, including note-taking during meetings, printing, binding, and other extra services that are standard in a business center.
- Ease of reservation. While it might be simple to book a hotel room online for the night, booking a meeting or conference space typically involves numerous points of contact. In comparison, softwares like Meeting Hub deliver a simple and seamless experience for those shopping, booking and paying for a meeting space online.Such software also provides additional advantages over pay-per-click advertising, which Golding says ranges from $15 to $25 per click. “There’s zero cost of acquisition. Online bookings systems are a really, really good way to sell coworking memberships and office space because it drives traffic into your center and into your space.”
- Smaller minimums. With less overhead and fixed costs than a hotel, workspaces are much more agile and able to deal with meetings of 20 people or less in an economical and price-competitive fashion. “Hotels usually want more than 100 people and require specialized catering, making packages very expensive,” Cottle noted. “A typical hotel model uses catering and events to get room sales to feed the hotel in big blocks, resulting in huge catering contracts and other services. Meeting planners often have to deal with separate contracts for catering and events which is tiresome.”
- Even if an operator does not have space to accommodate 20 or more people, many of the same principles apply to hosting smaller meetings.
Coming Next: Part 2. Best Practices on Hosting Successful Meetings