Is WeWork missing the golden opportunity to work remotely?

Skift grip

The coworking giant posted a loss of $504 million for the first quarter of this year, although the numbers are heading in the right direction. But has it run out of steam after righting so many wrongs in the past?

Matthew Parson

Co-working space provider We work spent the pandemic dealing with the repercussions of over-expansion and mismanagement after the ousting of its CEO and co-founder in 2019. While this was happening, the global work pattern was changing all around him.

But are there now opportunities for the contracted brand amid the ‘big merger’? Is WeWork lining up with the (relatively) good news that other industries are now seeing, like travel now rebounding from the pandemic, or the relaunch of the experience economy?

It’s a “crucial year” for WeWork anyway, according to a data pundit.

Cost reduction

WeWork last week posted a net loss of $504 million for the first quarter of this year – not the result he would have liked given the easing of Covid restrictions, but a marked improvement on the loss of $803 million in the previous three months, and miles ahead of the $2 billion loss recorded in the same period a year ago.

Part of the improvement is due to WeWork cutting costs, particularly “selling, general and administrative expenses,” according to Cowork Intel. They were down 57% compared to the first quarter of 2019. They now represent only 20% of total costs compared to 43% in the quarter of 2019.

Still, maybe it was too much. Other companies have since grown, making acquisitions. WeWork rival Industriousfor example, this month acquired The Great Room in Asia and Welkin and Meraki in continental Europe.

Other companies have doubled down on their marketing. Airbnb, which has made no secret of its attempt to woo remote workers, refined its approach to reducing its reliance on Google in 2020 before the pandemic hit; now its new in-house marketing, advertising and creative department employs hundreds of people.

Another concern is location. WeWork is quite dependent on New York and London. In the first, only 8% of Manhattan office workers are back full-time, according to reports. And in London, there is still uncertainty from the banks, and a ongoing battle with government employees.

Hotels and airlines may be able to raise rates, but the situation is trickier for WeWork and other office providers. “They’re trying to stay competitive and make coworking more accessible,” said Jade Tinsley, chief marketing officer at Coworkintel. “Flexible offices are the pillar on which they build their culture. The price increase will also have an impact on the occupancy rate. It’s a balancing act. »

As the pandemic has impacted the price structure, confidence is returning, she added. And with whispers of a recession, particularly in the UK, WeWork CEO Sandeep Mathrani said it could play into his hands, as “Uncertainty…it causes people not to make long-term deals.

“There is a growing appetite for flexible spaces from large companies. If companies decide to capitalize on the new working culture and shared offices, then flex offices could be the new normal for corporate institutions,” added Tinsley. “On the other hand, small businesses and individuals might make the decision to stay home instead.”

Investors are also mobilizing around the co-working sector.

On Wednesday, commercial real estate and investment services company CBRE Group announced a new $100 million investment in Industrious, to help it expand outside of the United States and into other countries. CBRE invested $230 million in Industrious in late 2020 and early 2021.

“The investment is based on our shared understanding that there is a monumental opportunity ahead of us as companies rethink their real estate strategies,” said Industrious co-founder and CEO Jamie Hodari.

WeWork’s Mathrani said the company will post its first profits later this year, and Tinsley explained how it could soon break even. in a recent blog post.

“This is a critical year for WeWork, operationally,” she said. “As near-pioneers of the concept, they’re not at a make-or-break point. They are moving into new ground and have a fair amount of investment behind them. They’re trying to find that path to breaking even, and they’re moving in that direction.

Notes

It’s usually during the quieter summer time that companies put out press releases with quirky investigations, mostly to make up for not too much going on. Summer is coming early for SAP Concur, the travel and expense platform. He took the pulse of American business travelers for his latest Pulse report.

The survey found that most of them (78%) were happy with the pace at which their business was returning to pre-pandemic travel habits, such as reducing or eliminating safety protocols. More than half of business travelers (55%) were unhappy with their current number of business trips, including 20% ​​who would rather travel more than they did.

As expected, the survey suggested that flexibility remains a top priority. But a worrying sign is the number of business travelers who often worked in the toilet while traveling, at 39%. Fortunately, it’s below cafes (70%) and hotel lobbies (64%).

10 second catch up on business trips

Who and what Skift covered last week: Air France-KLM, CitizenM, climate change, Dubai, Hotailors, Japan Airlines, Marriott, Radisson Hotel Group, Ryanair, Airlines to SingaporeUber, United Airlines.

In short

Velocity Global raises $400 million to help remote workers

Global Talent Solutions Platform Overall speed raised $400 million by further tapping into remote work trends. The company said it was “a pivotal moment to signal how investors are prioritizing the future of work” and says it is on track to achieve an annual net income rate of $200 million by the middle of this year. This Series B funding round was led by Eldridge and Norwest Venture Partners.

SAP Concur appoints new president

Charlie Sultan took on the role of President at Agree trips. He will be responsible for travel solutions management, vendor merchandising and customer needs, market intelligence and market growth for SAP travel solutions. Jim Lucier, a 13-year Concur veteran, stepped down as president of SAP Concur in January of last year. Sultan most recently served as Chief Operating Officer and Senior Vice President of Strategic Planning at SAP Concur. Previously, he spent 15 years at American Airlines in roles spanning corporate strategy, finance, distribution, sales and marketing.

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