Six to Start is based in a large building containing dozens of managed and serviced offices. On the way to the shared kitchen at work, I noticed two empty meeting rooms. It occurred to me that, just like an empty seat on a plane, an empty meeting room is lost cash. Sure, there is a small cost on keeping the room clean and well-maintained, but the standard fees for meeting room use provide an enormous profit margin. Given that most of the cost for the room – building it and buying furniture – has already been paid, surely it would be wise to keep it in use as much as possible, even at a lower per-hour fee, in order to maximise profit?
I suspect that most building managers don’t bother doing this for one main reason – it would take too much work. To prevent losing money either through oversupply (by means of unused meeting rooms that could’ve been offices) or undersupply (by means of lost meeting room fees when all the rooms are full) there is usually a certain ratio of meeting rooms to offices.
Obviously the calcuation isn’t perfect. Most rooms will be empty most of the time, and occasionally all the rooms will be full. In order to still try and make money, managers will set the fees at a rate that will – over time – cover costs, even when the room is empty.
This is incredibly inefficient – as inefficient as an airline setting a single price for tickets within a class, and then letting the plane fly with any seats empty. In 1985, American Airlines began a yield management program in which otherwise empty seats were sold cheaply. Nowadays, we all know that there are certain days where tickets cost much more, and that we can also snap up bargains if we wait until the very last minute.
So, why not perform yield management on meeting rooms? Set up a simple tracking system for usage of all meeting rooms in a building and dynamically set prices based on both historic and live demand. Bump up the prices for rooms at peak times (late morning, early afternoon) and for those reserving in advance for important meetings, and reduce them for slower times (evening, weekends). Allow non-time sensitive customers to check prices so that they can snap up a bargain if the room is empty for an impromptu brainstorm.
The main reason I’m interested in this is not because Six to Start needs to use meeting rooms a lot, or that I see this as a brilliant business opportunity (then again, who knows…); it’s because my thoughts have lately often turned to organising events like Barcamps and miniconferences. These sorts of events are relatively easy to set up, but you do still need to find a reasonably large amount of space, which can be tricky to find. I remember standing on the roof garden during GameCamp (kindly hosted by Sony 3Rooms by Brick Lane) and looking out at the large office buildings nearby, thinking of the dozens if not hundreds of meeting rooms that were going empty right at the moment. Rooms that could be used – and paid for – by any number of interest groups, clubs, conferences and reading groups. If buildings plugged their data into a central website (say, RentAMeetingRoom.com) which aggregated and displayed all meeting room availability and prices in a city, you could really make the system much more efficient. Perhaps in time you would even have people buying meeting room futures, or suchlike.
There must be any number of physical resources like airplane seats in which:
- There is a fixed amount of resources available for sale.
- The resources sold are perishable. This means that there is a time limit to selling the resources, after which they cease to be of value.
- Different customers are willing to pay a different price for using the same amount of resources.
where yield management isn’t being used because the prices don’t justify it yet (after all, flights are more expensive). But as the price of the software comes down and administering the use of the resources becomes more streamlined, I think we’ll be seeing yield management being applied to all sorts of weird things like cars, bicycles, rarely-used powertools, pianos, gardens and so on. What a glorious future we have ahead of us!