The Challenge of Coliving Economics: Why some coliving spaces go bankrupt and how to avoid the short-term, high-end yet affordable trap

Something truly interesting happened recently on Twitter - a big thread against coliving economics 😲

Peter Levels from (and few other projects), a well-known influencer in the digital nomad and remote work scene, created a Twitter thread on "why coliving is not profitable".

He explained how coliving needs to take into account the community management and the luxury of amenities, which makes it a high-end product and un-affordable for many.

According to him, coliving for short-term stay can not compete with AirBnb or Hotels (like Selina would be). And even in the case of Selina, his argument was that it's still heavily subsidized and in growth mode.

Here is his thread:

I really sat with it and decided to respond.

Which led me to google "how to reply on Twitter" and watch a 60s video on how to actually do it 😂

After figuring this technical part out, I created my first Twitter thread.

Here is what I wrote:

Interesting threat on #coliving economics by @levelsio with some truths to a coliving conceptualization that is based on three assumptions which, if changed, can change the threat's outcome:

Assumption /1 - coliving is for short-term.

It's true that in that case, it's hard to enter the affordable model. Yet, long-term coliving spaces can work especially when the experience design is being put on residents. See the bottom-up or systems approach which I outline below.

👉 different community building models

👉 their ROI over time (and how systems approach is cheaper than the hotel top-down approach):

Assumption /2 - coliving is for affordable.

While I highly align on the vision of "living should be affordable", there is a desire for higher end coliving - and for the luxury of being able to share with a) a curated group of people that b) engages in curated experiences.

The "non-affordable" coliving is currently the predominant option, including for nomads. Please don't get me wrong: I want coliving to become affordable in the public policy sense, but in the non-affordable case, economics can work with even more certainty.

And assumption /3 - coliving includes private space.

Because when it's not the case, such as in the pod model, the coliving plays with solving the game of density. In that case, coliving can work since people go from needing 15m2 to 5m2.

This can compensate for the cost of experiences (such as the community manager) and the cost of large communal areas. Check out this post about coliving x pods:

But, after giving some perspectives to why coliving CAN be profitable, let's also face the truth: it's truly tough for coliving to be sustainable if operators don't understand 1) responsibility-driven community building, 2) price points and 3) how to solve the problem of density.

And hence, solve these three issues straight up before you enter the game, or you might end up like a lot of other operators: closing down, or raising until you pivot.

So, what's the conclusion?

Peter brings up a good point: that short-term, high-end coliving cannot be affordable and can most likely not compete with AirBnb or hotels.

But that doesn't mean that other coliving concepts cannot work out financially! 

 There are more coliving forms than the short-term, high-end one - from long-term urban coliving to affordable, high-density coliving and high-end, rural coliving spaces.

 Which leaves operators with three main variables to play with:

1. Play with price points: creating alternative revenue streams, memberships and or offering a mix between high-end and affordable can be an option

2. Solve the density problem: give people less amount of private space, as it's mostly meant for sleeping only, and give them in exchange large common areas for an affordable price - for example, pod-style living is taking off in certain parts of the world, as I've already mentioned a few months back in this article (click here).  and

3. Implement long-term community building approaches that leverage the residents' potential and engagement: implementing the bottom-up or systems approach in coliving, as I described in this blogpost (click here), can help you save costs, time, and increase length of stay.

 Do you need help turning your coliving economics upside down? Contact me here or ping me on Twitter @guiperdrix to make it happen. 

I'm Gui, a coliving operator, facilitator, and industry builder with one mission: to make coliving the best experience one can have.

I founded Art of Co, a global resource platform and consultancy to create transformative coliving spaces, wrote the 📘 Art of Coliving book , and am the director of Co-Liv, the global association of coliving professionals. Come engage with other passionate coliving builders in my 👉 Telegram community or join the 👉 Coliving Cocktail newsletter, where I send out recaps of everything that happens within the coliving world!

PS: Need help to create state-of-the-art coliving experiences? Write me an email here or contact me on LinkedIn 💥

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