Why don't landlords run hotels?

Because it is not their core business. Because it's hard. Because they are not set up to deal with daily interactions from demanding clients with high expectations. Because the business model provides a solution to a transient client base with intermittent demand resulting in a constant and relentless sales and marketing effort.

Landlords generally want certainty. They want a solid and predictable income stream that has much fewer 'touch points'. One client contact person per 100 desks/floor, rather than 1-2 customer/s per room. And whilst landlords are beginning to recognise the value of well-executed hospitality, they have no experience in delivering it.

Running a flexible workspace or serviced office shares many similarities with running a hotel or serviced apartment business.

From a business model perspective, both are entirely reliant on achieving the fine balance between occupancy and rate in an ever-evolving landscape with yield management and cash flow projections driving decision making.

Both are reliant on customer loyalty, word of mouth, and repeat business and both have an ever decreasing committed income stream that requires constant 'top-up' via a full-time sales effort.

Both need to WOW their clientele to generate loyalty whilst maintaining a balance between price and service, i.e. value.

Given these observations why would any institutional investors or building owner contemplate running a flexible workspace operation in-house?

As with hotels, smart landlords will partner with a well established flexible workspace operator with the brand, the experience, the systems, the processes, the networks, the existing client base, the sales channels, the operational standards, the finance capabilities, and the technical know-how to deliver what is a very complex solution.

If you wouldn't run a hotel yourself, why would you try to run a flexible workspace? The only thing that changes is that the beds have been replaced with desks.

If you want to know more get in touch: [email protected]