So you already have big plans for your coliving space. You’re going to grow a community, you’ve determined the voice of your brand on social media and decided how the rooms should be decorated.
But when you’re just starting out, these things can wait. There are much important aspects of the coliving business you have to worry about now.
Many people choose not to worry about these details and that's why the majority of small coliving spaces fail.
Starting small is the right way to build a brand but it's difficult to make a profitable business out of it. You need a certain number of rooms to make your unit economics work.
In my experience, the minimum number of rooms to start is ideally 20 or more.
You might consider it a lifestyle business and opt to act as the manager yourself, this way you don't need to pay a salary. However, this format is wrong for a couple reasons.
First, you should always pay yourself a salary.
And second, sooner or later you’ll likely want to delegate operations to somebody else, you might like to scale to more locations if business is successful or in the case of a mediocre business you may even get bored.
One of my mentors once advised me to divide coliving “experiences” into 2 categories:
The main idea behind this (and to be fair, I didn't listen to this advice at the time) is that by offering different accommodation standards to your guests you maximize yields from your property while creating a vibrant and diverse community.
There will be people demanding private ensuite rooms and others who would prefer to stay in shared spaces.
Finding the right mix is hard.
I’d focus on having more ensuite rooms in general but having a few shared rooms will give yourself a lot of flexibility. Private rooms can be kept small as much as possible.
You should focus on mastering the common spaces where people are going to spend most of their time. The rooms are mainly for sleeping and keeping private belongings.
Traditional hospitality businesses have always been focused on matching one standard with one brand. That's why Marriott and Hilton have so many different sub-brands.
New hospitality startups like Selina completely disrupt this model and researching them more in detail shows us a thing or two.
Combining different types of guests has its challenges but if you can figure it out, the pay off is high.
It somehow became a norm that co-working space(s) go hand-in-hand with a coliving layout.
But is a co-working space really needed? And if yes, in what capacity?
The coliving spaces I’ve operated were strongly targeted at remote workers and digital nomads, so logically, for me, the co-working area was an important part of the value proposition.
The capacity was designed in a way where all coliving guests were expected to use the space. However, this turned out not to be the case. Not everyone was using the co-working space daily, and operating on different schedules, most people only used it for a couple of hours when they did.
From my experience, if you have 30 coliving guests, you can likely count a maximum of 15 of them to be working at the same time during the peak hours of the day. Again, remember here that I am talking about a co-living space that is specifically targeting remote workers and even in this case, I often found myself feeling awkward as I encouraged them to use the space.
This was my experience but then when visiting other coliving spaces and talking with other operators I learned that the co-working areas are almost always under-utilized.
While designing a co-working area, I'd suggest thinking about it more as a large living room than an office. A place where people can come to read a book, study, listen to a podcast. Not just work.
Consider adding additional smaller meeting rooms and spaces for calls and focused work. I really like how the coliving hotel Zoku in Amsterdam designed their space:
At the end of the day, it really depends on your concept - if you want to target remote workers, they might expect a professional workspace.
On the other side of the market spectrum, if you have the same target group as Noah, you don't need a workspace at all.
Tricky part is finding the right balance in the distribution of the space between common areas and rooms. What is appealing for many real estate developers: you can have much smaller rooms than in a traditional residential property because you design amazing common areas where people spend a large portion of their time.
In the coliving business, you make money by selling rooms.
This is clear for real estate people but sometimes unsexy to hear for lifestyle entrepreneurs. Adding 1-2 more rooms to a small property can dramatically impact your business. It can easily define if you are going to be profitable or not.
This article is part of the guide where I'm sharing tips on starting a coliving business.
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I can help you with funding and distribution. Happy to discuss your project over Linkedin or Twitter chat.
PS: If you live in Amsterdam, we can meet at the next hospitality coworking day.
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