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“The Coworking value chain will soon integrate three different kinds of players”

by | Jun 22, 2020 | Coworking, Hospitality, Podcast, Real Estate | 0 comments

Andri Rabetanety is Senior Lecturer in Real Estate Finance at Glion Institute of Higher Education. Expert in the hotel industry, Andri sees a similar economical value chain taking place in the coworking industry. Learn more about Andri’s hotel experience and what he envisions for the coworking industry.

Main takeaways

The highlights from our conversation with Andri Rabetanety are summarised below:

  • Glion Institute of Higher Education

    In the hotel industry, the economical model is addressed by three different categories of players. Each of them focuses on one aspect of the value chain: 1) The ownership. The property owner is responsible for the financing of the infrastructure and the building; 2) The management, who is responsible for the management of the operations, the rooms, the attendees, the spa, laundry services, security, A/C, etc.; 3) The brand experience: what the customer will see. The brand is there to maintain the consistency between different locations, in terms of marketing, positioning, pricing, etc.

  • These three different businesses can help us understand how the hotel industry grew in the last years
  • This model has been around for years. In the 50’s, most of the hotels were owned and operated by the same person, who took care of the three functions.
  • As hotels were challenged to grow, they had to separate each of the dimensions to grow faster. The property owner just financed the walls. He leased the whole unit and the operator got a management fee. Because they wanted to grow very fast, hotels could not buy buildings that quickly as it was very expensive too and it required too much. The fastest way to grew was then to franchise.
  • Hotel experience is mainly seeing the brand and knowing what to expect.
  • Most hotels operate that way. The portion between the three players may still vary according to the brand.
  • Now, hospitality grows by “asset light strategy”, through franchising.
  • The luxury segment can only be the exception. Hotels will keep owning a specific building because of a location value, a unique kind of property, exclusive, like one you could have on the Champs Elysée or on the 5th Avenue in NYC.
  • The coworking model is very likely to embrace the same three layers model because it is a hospitality business.
  • You can create special perks related to the coworking brand or franchise in order to accelerate the flow of new locations opening.
  • Landlords or managers are the ones picking the franchise based on their customer target segmentation. Example: you know in a city that there is a lack of “economy accommodation”, then, a landlord will take the brand related to “economy accommodation”. Clarity on the segmentation is key. And this is what will most likely happen in the coworking industry.
  • In the beginning, the hotel came up with the stars system. It was not very satisfactory. They figured out they needed more categorization. And branding was there for that. Every time they see a hole in a market, they created a related brand.
  • Coworking franchise can now be a model for growth. Otherwise, it will require too much capital, as the WeWork story showed.
  • We should not forget the independent operators. They are representing a very big slice of the hotel market.
  • The “Soft branding” model can bring another dimension on that. You have no brand book or pricing to follow. It is the “by …” experience. They give you access to the marketing platform, the loyalty program, etc. “Soft branding” is another way to integrate the population of independent players.

Watch the full video conversation with Andri Rabetanety below.

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