45. Davinci Workspace and Communications Services Industry Report
This month, Davinci Virtual Office Solutions issued a report entitled the “2017 STATE OF WORKSPACE AND COMMUNICATIONS SERVICES”
It’s a hefty 30 pages long so I’m going to summarize it for you and provide some key take-aways in case you don’t have time to sit down and read through it. Here is a link to the report.
Why is it important to you?
Overall, the report provides an overview of the flexible workspace market and the demand drivers behind the recent shared workspace growth. But their point of view is that while the industry seems riveted by the growth rates of flexible workspace, the more significant growth, and higher margin growth, is in communication services for the mobile professional. If you are listening to this podcast, you’re interested in flexible workspace and learning more about the demand for communication services by the same user base may spark some ideas about business models and opportunities.
For context - let me give a quick overview of Davinci Virtual Office Solutions, what they do and how you can work with them. They are a leading provider of turnkey virtual office, communications, and workspace and meeting room solutions.
As a flexible workspace provider, you can list your virtual office services, meeting rooms and workspaces on their platform. They market to their extensive customer database and match demand with supply. You can also sell their communication services to your members at wholesale prices and make margin on those. Davinci take a % of the transaction as a marketing fee but gets you business that you would not have gotten with your own Google Adwords budget or SEO work.
The report kicks off with an overview of the shift to mobile work and the rise of the sharing economy. It reminds us that 25% of office workers work away from the office 2 days a week and that an Intuit study predicts that by 2020, 40% of the workforce will be fully mobile.
Davinci’s report draws out some interesting data on the growth rate of communication services for remote services vs. work space.
The report breaks down the market of Workspace and Meeting Room Providers by the following:
Commercial Real Estate
Coworking Operators (8,000-10,000)
Virtual Office Operators
Meeting and Workspace Platforms
Serviced Office Operators (8,000 - 10,000)
The report breaks down Communication Service Providers by the following:
Specialized Receptionist Services
The report says that these segments tally to over 100,000 meeting, coworking, or work spaces, accounting for more than an estimated $65 billion in annual revenue.
Business Centers that offer flexible hybrid models generated over $21 billion in revenue in 2016.
Workspace providers (day offices and coworking, not private offices) generated upwards of $4 billion in 2016 (assumes 50 percent occupancy and $50 per hour).
Coworking spaces produced as much as $48 billion in 2016 (assumes $40,000 per location per month).
Circling back to the insights of the report, Davinci points out that while Coworking continues to grow rapidly, increasing 700 % since 2011, 1 in 4 coworking space providers failing to generate a profit.
Davinci points out that the profit margins for virtual offices and meeting spaces are much higher than workspace profit margins—18.4 percent compared to 11 percent. Communications services margins are higher as well. In terms of demand for services, the average number of workspace customers per office location increased 6.3 percent last year while virtual office customers grew nearly 800 percent from 2011 to the present.
They’re highlighting an opportunity for flex workspace providers to optimize their offerings to focus on higher margin offerings including meeting rooms and communication services.
The report details customer use of workspace and communication services:
Customers relying on workspace and communications services expand the use of these individual solutions over time. 53% of the time, the first purchase is virtual offices, 33% meeting rooms and 14% Live Receptionist and Live Web Chat.
53% Virtual Offices
33% Meeting Rooms
14% Live Receptionists and Live Web Chat
97% of Davinci customers that book meeting rooms buy virtual office subscriptions and 35% buy Live Webchat services. The key takeaway here is a) there is demand for these services if you aren’t offering them now and b) there is a lot of value in integrating them into your offering.
Another advantage is the customer retention advantage - Live receptionist services retain customers nearly 18 months on average. Virtual office and live web chat customers also exhibit comparably lengthy retention ratios—remaining customers for 16 months and 15 months, respectively.
Especially if you’re starting a new space and have the opportunity to design from scratch, here’s some additional detail on Meeting room and Workspace Bookings through the Davinci Virtual Solutions Platform
26.5% Small Conference Rooms
25.5% Day Offices
19.5% Large Conference Rooms
19.5% Medium Conference Rooms
5.25% Board Rooms
3.6% Training Rooms
Less Than 1% Hot Desk
Less Than 1% Event Space
When considering security and access technology for your space, this data is helpful - 21% of the time, a booking is not completed on the Davinci platform because the customer needs after hours - weekend or weeknight hours that are not available. Consider the increased revenue and margin you could make by designing your business to support after hours meetings. If you are considering this, take a look at access technology from Brivo and Kisi.
Another key consideration as you set up your system to manage your meeting room schedule is that The average booking ratio for live inventory sites is 49 percent higher than the non-live inventory rate. Live inventory means that a customer can book a meeting room without an email exchange to delay their purchase.
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