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Musical Chairs

Looking to save on steep office rent? Hoteling could help cut your overall expenses.

Two years ago, Lou Hoffman noticed many offices at his professional services firm in San Jose, California, often sat empty while their occupants traveled or visited clients. When Hoffman actually figured out how ineffectively he was using his overall office space, the amount of money being wasted made him squirm.

It turns out only 45 percent of the Hoffman Agency's space was being effectively utilized. After searching for ways to improve the situation, Hoffman discovered a concept called hoteling.

An emerging facilities management strategy, hoteling doesn't assign employees desks for their permanent, personal use. Instead, workers use a desk for as little as a few hours, relinquishing it to the next employee once their work is done.

Employing hoteling helped Hoffman set up a system where, for one-third of his 65-person work force, two employees shared a single desk on a rotating basis. Additional temporary workstations helped handle occasional space conflicts and overflows. As the company grew, Hoffman was able to stay in the same space, postponing paying an extra $10,000 in monthly rent, for 10 months. Adding the cost of rent plus savings acquired from not having to relocate or furnish a new office, Hoffman figures hoteling saved him approximately $130,000 in less than one year.

Those are the kinds of numbers that get companies' attention--firms from IBM to Merrill Lynch have been utilizing hoteling. And despite some drawbacks, indications are that they, along with many other firms, have checked into hoteling for an extended stay.

"What drives big companies to consider hoteling--flexibility, space-use efficiency, functionality and sensitivity to individual work schedules--also works for small companies," says Ted Hammer, senior managing partner with HLW International, an architectural and engineering firm in New York City. "It's not a big or small thing; it's a productivity thing."


Mark Henricks is an Austin, Texas, writer who specializes in business topics and has written for Entrepreneur for nine years.

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This article was originally published in the April 1999 print edition of Entrepreneur with the headline: Musical Chairs.

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