Hoteling co-workers
Hoteling office workers first took hold in the 1990s, but with major co-working space providers such as WeWork Cos. Inc. gobbling up traditional office space, Vancouver startup CityHack Corp. is turning to actual hotels to offer entrepreneurs space.
CityHack founder Kim Tholl is launching the company’s third venue this week with Fairmont Hotel Vancouver, after successful partnerships with Mayfair Hotels & Resorts Ltd.’s downtown Vancouver properties Hotel Blu and Hampton Inn & Suites.
The CityHack partnerships offer underused hotel space to space-hungry workers, a first in Canada. This animates the space for the hotels, which are paid based on use by CityHack members. The cost of access is a fraction of the cost of purpose-built co-working space, at just $99 a month, but after just two months it’s paying off.
“We regard ourselves as a bridge or a ‘matchmaker’ between supply and demand,” Tholl explained. “CityHack didn’t create anything new. We only unlocked or uncovered previously unavailable spaces by providing that accessibility for our members.”
Hotel Blu, for example, opens its breakfast room to CityHack members for five hours each afternoon.
“Being a boutique hotel with only 75 rooms, we are not the most well-known hotel in downtown Vancouver,” said general manager Shannon Gu. “It’s a form of advertising or brand awareness for people to know that we’re here.”
Similarly, Fairmont Hotel Vancouver catering manager Caitlyn Brown said CityHack boosts exposure of 7,500 square feet of meeting space formerly used for storage, which the hotel opened last spring. CityHack also has access to other unoccupied meeting space on a day-by-day basis, and members can access room discounts among other perks.
“It’s allowing us an opportunity to showcase our meeting space to working professionals in Vancouver, and it’s allowing them a place in the luxury market,” Brown said. “They have coffee and tea offered every day, they have Wi-Fi that’s included with that as well and a dedicated banquet manager that’s available on the floor, ready to assist them.”
The arrangement beats the days of nursing a pot of coffee in the hotel lounge, holding court with whatever notables and guests might pass by.
High costs
One impetus for CityHack’s partnership with local hotels was the recognition that real estate is expensive in Vancouver, no matter the kind of space one is seeking. With strata office space busting through $2,000 a square foot in the core last year, and Colliers International reporting average gross asking rents cresting $90 for A-class space, the cost of doing business is high.
The cost of living is also up there. Rents increased an average of 6.4% in Vancouver last year, according to Canada Mortgage and Housing Corp., while the latest RBC Economics assessment of housing affordability was grim.
“In Vancouver, for example, the income necessary to cover ownership costs and clear the mortgage stress test was $211,000 in the third quarter,” it reported last month. “The outlook isn’t promising. We expect that further interest rate hikes will keep upward pressure on ownership costs in 2019.”
Apartments require 52.4% of a typical Vancouver household’s income, while a detached home requires 117.3%.
While moves by the city and province to tax residential property owners into renting underused dwellings have yet to bear fruit, tenant demand is such that commercial property owners are seeing opportunities to make space available as part of the so-called sharing economy.
Stalling interest?
Colliers International suggests that a pause in retail sales growth in 2019 may also put the brakes on interest rate increases, which would be a good thing for homeowners.
Its latest retail report indicates that sales of luxury goods may face headwinds this year, while prices for some consumer staples are edging down.
“If inflation in 2019 appears to be tracking well below the 2% target, the central bank may choose to lower rates, which would stimulate the retail sector,” the report states.
The comment reinforces a widespread sense of slowing growth across the economy and greater discretion in consumer spending after years of heady growth. •
