Musical Chairs

Looking to save on steep office rent? Hoteling could help cut your overall expenses.
Magazine Contributor
6 min read

This story appears in the April 1999 issue of Business Start-Ups magazine. Subscribe »

Two years ago, Lou Hoffman noticed many offices at his firm in San Jose, , 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 strategy, hoteling doesn't assign employees desks for their permanent, personal use. Instead, workers use a 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 thing."

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

Be Their Guest

Hoteling started about five years ago, spearheaded by companies such as the major accounting firms. The innovators tended to have big hoteling facilities, warehouse-sized blocks of desks with bustling concierges upfront directing workers to their temporary locations, funneling messages to the right phones and otherwise keeping things under control. More recently, operators have been reconfiguring their facilities to offer hoteling-like arrangements to a wide variety of customers.

Most early users reported success with the tactic. That, combined with rising real estate costs and falling prices for information , have made hoteling one of the hottest current concepts in facilities planning and , says Hammer.

"We probably haven't had a client in the last five years who hasn't asked about the concept," says Hammer. What companies researching hoteling are finding is a technique that offers alluring cost savings--but only for those who master its intricacies.

Checking Out Checking In

Successful hoteling starts by involving all members of your company in the planning stages, Hammer says. Only when you accommodate every interest, from financial to personal, can your hoteling plan work. "Those that try to implement it but only consider the real estate [aspect] don't succeed," Hammer warns.

Much early work must be spent creating definitions and guidelines. For instance, entrepreneurs must decide which members of their staff will be candidates for hoteling. (Hoffman says in his company, any employee whose job takes him or her out of the office more than 33 percent of the time is a potential candidate.) Entrepreneurs must also specify the that will be involved, from laptop computers and cell phones to the more powerful network servers and remote control software that are likely to be needed at the office.

Creating a consistent hoteling policy is important for a variety of reasons, says Karol Rose, managing director at Dependent Care Connection, an alternative workplace consulting firm in Westport, Connecticut. "Otherwise, it becomes an employee-relations nightmare," she warns. "Managers don't know what they can offer, human resources has to get involved in every arrangement, and it becomes very labor-intensive."

Consistency also allows entrepreneurs to provide a uniform message to employees, recruits and others who may look askance at the idea of an office job that lacks a permanent . Communicating the reasons and rewards of hoteling to workers is a crucial but often overlooked part of successful implementation, says Jim Miller, general manager of extended workplace solutions for US West in Englewood, Colorado. Although the former Bell operating company makes its money by selling technology to companies implementing hoteling, Miller says technology is only part of the answer.

Along with communication, training and support are also key components. Users have to be trained to quickly learn and use slightly different computer and telephone setups. Information technology support staff may also have to be beefed up. The Hoffman Agency, for instance, has two full-time IT support people, twice what Hoffman estimates he'd need without hoteling.

The Inhospitable Hotel

Paying attention to details is no casual matter. A poorly developed hoteling arrangement may wind up costing, rather than saving, a company money. One risk is that the company will, thanks to its new office setup, become unattractive to new recruits. That's especially true when it comes to recruiting senior executives, says Hoffman.

"People who've been in the work force for 10 years or more are used to having a luxurious corner office," Hoffman says. "It takes a certain amount of salesmanship to make the candidate understand that hoteling helps the company, which in turn helps the employee."

Existing employees may also become estranged by an inhospitable hoteling setup. It pays to treat the implementation of hoteling with the same care Conrad Hilton might have used to open a new resort. For instance, major issues concerning lighting and office supplies arose not long after Hoffman's company began hoteling.

While the problem with the lamps in the temporary workstations was easily remedied, the office supply dilemma was more difficult to solve. People who came in to work were frustrated to find that the station's previous occupant had absconded with pens, paper and other supplies, Hoffman says. His solution? Assign a housekeeping staff, similar to what a hotel uses to keep its guest rooms in order, to stock hoteling desks with necessities.

Hoteling may not be the easiest change you've tried to implement, but those who have tried it say it works a lot better than you might have imagined. "I'm amazed more people don't do it," Hoffman says, "because the benefits are so compelling.

Next Step

  • (, is an online journal and site with a variety of articles, information and links regarding hoteling and related topics.
  • Creating a Flexible Workplace, by Barry Olmsted and Suzanne Smith (Amacom). Although the second edition, published in 1994, predates hoteling, it presents sound fundamentals for alternative work arrangements.

Contact Sources

DCC, fax: (203) 291-3571,

HLW Architecture, 115 Fifth Ave., New York, NY 10003, (212) 353-4609

US West,,


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