Co-working spaces are coming up in luxury hotels, thus changing the way office feels and looks

If you thought co-working spaces was all about having a few workstations with a coffee machine and free Wi-Fi, then the new-age facilities will make you think again. Co-working spaces are changing the way they function and are finding good companionship in five-star hotels and malls. Whether it is Awfis which has set up a centre in Taj Deccan in Banjara Hills or The Park, Somajiguda having multiple office spaces set up in their hotel, Hyderabad’s co-working space is moving with the changing trends.

“Co-working spaces in five-star hotels and malls provide an ecosystem to just the provider but also to the user. It has benefits like 24/7 operational facility, ample parking, entertainment, food and shopping areas. Along with this a five-star hotel also has the added advantage for business travelers in terms of stay. In addition, for service providers like ours, these spaces prove to be more efficient in the sense we don’t have to worry about security and maintenance,” says Monika Misra, co-founder, iKeva – a Hyderabad-based co-working infrastructure provider.

The company has one of its Mumbai co-working spaces set up in a mall which provides them with benefits like parking and other amenities. These kind of co-working spaces also prove beneficial for hotel and mall owners as they lead to revenue generation and also help in utilising space better. For the co-working space provider as well, the burden of maintaining the space is shifted and they can concentrate more on providing better amenities inside the space. Most of these spaces have also built-in conference rooms and meeting rooms along with access to food, entertainment and other amenities.

Hotels and Restaurants Association of Telangana, secretary general, Pradeep Kumar Dutt said, “This is a very positive trend as it helps not only the co-working space provider but also the hotels to increase their occupancy rate. So in that sense it is a dual benefit for both service providers – in this case co-working infrastructure providers – and space providers – which are hotels. With many five-star hotels not having business round-the-clock, this kind of provision helps them in having regular business.”

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Shared workspace provider, Awfis, which is seeing growing investor interest in the co-working space, has drawn up plans for its aggressive growth to tap opportunities both in metros and tier-2 cities. The company plans to focus for next 2-3 years on the domestic opportunities before exploring opportunities in the Asian region (Sri Lanka, Bangladesh and Vietnam) and the Middle East.

Amit Ramani, founder & CEO, Awfis, told Telangana Today, “Our priority is to deepen the penetration in existing markets and enter new cities with focus on tier-II locations. In the next one year, we will strengthen our presence by foraying into cities such as Chennai, Kochi, Indore, Ahmedabad, Peshawar and Jaipur while adding more centres in Chandigarh. We will have at least two centres each in Ahmedabad and Kochi. We want to take our seat capacity from 25,000 to 40,000 in next one year by creating presence in 15 cities.”

The company has recently raised an additional $20 million series C funding from Sequoia India and Innoven Capital and The Three Sisters: Institutional office TTS:IO led by Radha Kapoor Khanna. Sequoia Capital has also invested $20 million earlier in Awfis as part of Series B funding. Awfis was jointly incubated by Amit Ramani and The Three Sisters: Institutional Office (TTS:IO) with a total capital investment of $11 million in April 2015.

Ramani added, “With the growing demand for co-working spaces, there is a focus on transforming under-utilised real estate assets and providing affordable work spaces for entrepreneurs. The additional capital will aid us in expanding our footprint in India with over 100 centres with more than 40,000 seats in the next one year. For us, access to capital had been smooth so far.”

On the competition in the segment, Ramani explained, “Crowding is happening now, but very soon, it will prove that only few quality players will survive, sustain and achieve profitability. Other players may remain either boutique or regional players. Only 4-5 large players will emerge at the end.”

Growing footprint
Awfis last fiscal scaled up to 25,000 seats across 55 centres with a member base of over 15,000 as compared to 5,800 seats in 20 centres with a member base of just over 4,000 in July 2017. Awfis today serves over 1,200 companies ranging from startups/MSMEs to Fortune 500 companies, forming the largest co-working community in India. The company counts among its clientele companies such as Hinduja, Vodafone, Mercedes Benz, RBI, Hitachi, ShareKhan, Zomato, Practo operating from various Awfis centres.

Awfis has inked lease deals totalling to 0.25m sq ft in the last two months across Hyderabad, Kolkata, Chandigarh and Noida. The company currently has a total footprint of 1.5 million sq ft across all existing markets in India. Awfis has a nation-wide network of 55 centres across nine cities and 45 micro markets.

Apart from its own proprietary centres, Awfis has been focusing on an asset light ‘managed aggregation’ model-partnering with space owners who have unused commercial space and transforming them into suitable workspaces.

He informed, “Future growth for Awfis is driven via this model and the company intends to maintain 60 per cent of inventory under the managed aggregation model and 40 per cent under Straight Lease model. We are also aggregating underutilised spaces in hotels and malls and converting them into shared workspaces. We are already covering around 7,000-8,000 sq ft under this model. This will remain our core strategy in future as well, accounting for a bulk of our activity.”

Awfis has also formed over 100 strategic partnerships that provide its community members seamless access to service providers in the areas of accounting, legal, recruitment, payments, web services, mail management, healthcare and insurance, making it a one-stop-shop for all requirements.

Hyderabad market
Talking about the prospects of Hyderabad, Ramani said, “The city is witnessing adequate growth. We have recently created large workspace in Raidurg. We anticipate that the city will remain one of the biggest places for this market place. In future, we will spread our presence in Secunderabad, Begumpet and the Financial District.”

The company has tied up with partners to launch workspaces in Raidurg and HITEC City recently under its managed aggregation model.

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Amit Ramani, founder & CEO, Awfis told Telangana Today, “With the smart cities programme implemented by the Central government, tier-3 cities will also grow in future.

Co-working space provider Awfis Space Solutions is seeing growth opportunities in the tier-2 space, across the county. The company has drawn out plans to expand its presence in tier-2 markets such as Chandigarh, Ahmedabad, Jaipur, Kochi, Bhubaneswar and Indore in the next 12 months.

Amit Ramani, founder & CEO, Awfis told Telangana Today, “With the smart cities programme implemented by the Central government, tier-3 cities will also grow in future. But it may take 2-3 years for these cities to emerge as places where co-working space can be created. However, tier-2 cities offer a huge and immediate opportunity. We will enter into six tier-2 cities within next one year.”

The company also plans to establish over 100 centres with 40,000 seats across Mumbai, National Capital Region, Bengaluru, Chennai, Hyderabad, Kolkata, and Pune in the next 12 months.

The company has created a nationwide network of 55 centres with 25,000 seats across nine cities including – New Delhi, Mumbai, Bengaluru, Hyderabad, Kolkata, Pune and Chennai and 45 micro markets. Awfis aims to increase the seat capacity in Hyderabad alone from the current 2,000 to 5,000 by the end of 2018.

Companies such as Vodafone, Hinduja Group, Reliance, Mercedes Benz, Hitachi, ShareKhan, Zomato and Practo operate from various Awfis centres. While SME sector is severely underserved, they form about 50 per cent of Awfis clients, while 30-35 per cent is represented by corporates.

When asked about the sector patterns, he explains, “IT and ITeS industry is a major growth driver for co-working space across India. There is an inherent quality of this industry, which seeks flexibility of operations, which co-working spaces provide. They usually enter into long-term agreements with us as long as nine years. We are also seeing several small and medium enterprises (SMEs) opting for our spaces as well as large companies opening their branch offices or India liaosoning offices. Startups and freelancers are also quickly adopting this model.”

Ramani adds, “We have a micro-market approach where we want to be in every single micro-market of the top seven cities of the country, creating co-working spaces in every 10 km radius in future.”

On the energy efficiency measures that Awfis is taking, he says, “We build our centres on sustainable perspective. The materials that we use are sustainable and support green energy. The challenge is that since we occupy one floor of the building, in most of the places, unless the whole building adopts solar, we will not be able to do it individually. But, we are looking at getting our centres certified on wellness grounds-on aspects such as air quality, lighting, ambience by providing better environment for occupants.”

At a time when data security is gaining prominence, he said, Awfis is making sure there is high data security. The data is on the cloud securing client data safe. Rakspaces are also given to clients so that they have both ownership and access to it. In the case of enterprise clients and large SMEs (where companies plan to take over 50 seats), data security is becoming a prime expectation and Awfis is meeting their requirements.

Awfis is also increasingly looking at creating standalone workspaces across the country rather than taking just a portion in a large building. It has such centres in Vasant Kunj and Mohan Cooperative Industrial Area of Delhi, Sector 44 of Noida, Lower Parel (Mumbai). “We have a combination strategy to go with standalone facilities as well as taking a portion in other buildings, depending on the micro-markets we operate,” he informed.

Saying that there is depth in the domestic market and India offers enormous opportunities, Ramani adds, “India is a growing market and about 1,00,000 people are using co-working spaces and this number could touch 10,00,000 by 2021-22. In the next 24-36 month we will focus on Indian market before looking at overseas opportunities. The market here is still largely untapped. There is further room to grow.”

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