I've done quite a bit of research on "overbooking" - and we've thought a lot about how it factors into our model:
When gyms, hotels, and airlines overbook they're specifically factoring in a % of cancellations and abandonment. For the most part, they're commodity services where MOST people simply buy the cheapest or most convenient.
They also have a pretty "binary" idea of usage: a hotel room is either occupied or not. Same with an airline seat. If someone isn't using a seat or a room, they're not getting value out of it either...or they need to be tricked into thinking they're getting value. There's a Planet Money episode that talks about the psychology between how people use the low-cost gyms and their business models.
In the show, they even contrast how much a gym would cost if everyone actually came 5 days a week - in fact, there are gyms that are specifically designed for this, to the point that they kick you out if you don't come to make room for other people who actually want to be there.
Commodity businesses (where the value trends towards zero) get consolidated or driven out of the market. People (eventually) cancel services they aren't using.
Add into the mix that coworking is essentially a luxury product (the majority of the audience has the alternative of working elsewhere for free), and I think a lot of coworking space failures start to make sense :)
Our model has flipped that reality on its head by actively avoiding the commodity position, and focusing on member lifetime value instead of maximizing immediate utilization.
Said another way - Indy Hall runs more like a professional association that happens to also have a workspace that members can use. Our full time members represent a little less than half of our physical workspace, but more importantly, they represent ~17% (and shrinking) of our total membership. Another ~20% of our members are here 1-3 days per week.
What about the remaining 63%? Well, they use a desk...almost never.
Does that mean they're not using their membership? Are we tricking them into thinking that they're getting value from their membership?
Not even close :) That 60% is often MORE engaged than some of our full time members (that's not a knock on our FT peeps, either). Our online community is a vibrant, always-on and in-your-pocket connection to the network. Our "almost never use a desk" members generate and often lead educational programming, social activities, events, and outings. This is the "professional association" part of our model at work, and since our association also provides a level of diversity that most industry-specific professional associations can't, we beat out the commodity market once again.
Most models that are tied to usage of space, where more members -> less available space.
Our model focuses less on the value of space and more on the value of the network. The majority of the value that a member of our community doesn't come from our staff or our space, it comes from the other members. In this way, each additional member -> additional available value.
Mind you, a room full of people who don't talk to each other isn't much different from it's commodity counterpart, working at the cafe for free. This model depends on there being a community where
people actually interact and contribute.
I say all of this because unlike gyms that bank on people not showing up, we've designed our business to make sure our members can get lots of value beyond the desk even when they're not at a desk at all.
-Alex