Jetting Into Letting

Britain's 49th richest man, easyGroup boss Stelios Haji-Ioannou, is turning his attention to the serviced office sector, and will open his first easyOffice in August. But will business users flock to the bright orange budget offering?

"Perhaps I will dress up as a big paper clip, or maybe I will walk down High Street Kensington dressed as a photocopier." Stelios Haji-Ioannou, Britain's 49th richest man, with a personal wealth of some 1.29bn, according to the Sunday Times' Rich List, is discussing the ruses he will employ to publicise easyOffice, the latest venture for his ubiquitous easyGroup empire opening this summer with an office in West London.

Rob Hamilton, Managing Director of Instant Offices and Stelios's business partner for part of the new easyOffice scheme, appears far from convinced by the campaign, but it is obvious he is going to be overruled, Forty-year-old Stelios has long had a reputation for memorable marketing stunts and an uncanny feel for the power of branding. He is, after all, one of those rare people, like Pele, Bono and Socrates, that's gets away with one name.

Apart from Stelios the celebrity, the easyGroup brand is best known for an addiction to luminous orange design and a "no frills" commitment to low prices.

Transferring this philosophy to the serviced office sector is such an obvious fit that it is surprising he has not done it before. "I've been sitting on my arse doing nothing," he says in explanation, a broad grin on his face. In fact, the serviced office sector has been on Stelios's agenda for over four years but he had lot on his plate. easyOffice is the 17th business to launch under the easyGroup banner since he created easyJet 12 Years ago.

In person, Stelios is an engaging mix of buoyant optimism and quick-fire conversation. But he also reveals a curious lack of self-confidence. At one stage he stops to ask whether there is an obvious reason why easyOffice might not succeed. During another pause he asks whether he is making a fatal error by offering too few services as part of the easyOffice package. "When I begin to experiment, that's when Stelios the entrepreneur come in," he says as he tries to explain the not-quite-fully-formed nature of the group's first serviced office.

160-166 High Street Kensington, W8, will open for business in August with around 100 workstations in 35 room located above one of the group's easyInternetCafes. While the centre will offer flexible contracts, the minimum length of which is only one week, no final decision has been taken yet on the maximum length of stay. "It will probably be 15-20weeks. Of course, we will have to decide by the end of May because we hope to start booking then."

When it comes to the services offered with the contract, it may be radically Spartan - "We are considering, in the world of mobile phones, doing away with fixed telephony" - or it may have a standard range of options. "There may be few services available and there may be a lot," Stelios adds. "We will listen to our first customers and see what they say."

However, such open-endedness masks a very certain sense of easyOffice's business model and target audience. easyOffice represents Stelios's bid to replicate his Easy-Hotel business model in the serviced office sector. While he is already formulating plans to expand, principally, into the UK's major cities and Dubai - "the world's hottest serviced office market" - he stresses that this is not a property play. "I'm really not keen to take an awful lot of property risk. I want to separate the bricks and mortar from the brand management."

The Kensington office and internet café are occupied on a long leasehold and there are no plans to buy freeholds. "We were already looking for something to do with the space on the first floor, so this is a good fit."

Similar space already exists above the easyInternetCafes in Glasgow and Edinburgh, and Stelios expects to have these locations running as successful as easyOffice by the end of the year. From there, he insists that "expansion will be purely on a franchise basis", although his website will tap into Instant Offices' 5,000 properties.

Budget Office Provider

EasyOffice will target the budget end of the serviced office market, or as Stelios puts it: the 'most price sensitive one of the three [areas of the serviced office market] that I believe exist." Stelios's view of the serviced office sector runs thus: the first sector, he argues, is made up of big corporations such as Morgan Stanley winning a new contract and then hiring rooms. He says that this market - the "Regus end" - is not for him as it is not price sensitive. "The users are twice removed from the payment - not even once." The second sector, which Stelios is still in two minds about addressing, is professional individuals, such as lawyers, that sell their services and want space but do not need to grow.

"The market we are after," Stelios says "is the third - the true entrepreneur." His typical client has already started trading from his bedroom or his kitchen table and now needs another address. "His better half might tell him, start getting out because there is mess in the house or he's about to start hiring people - when you go from one to two, to three to four."

As such, he has set a limit on the number of workstations per room to four "when you have over four probably you will go and get a lease anyway. But I will be delighted if, when we make the booking available, people take two rooms."

He is aware that there are plenty of rivals targeting the start-up looking for cheap space, the so called "mom and pop" operators. "Price is the big selling point. WE are not claiming to be better than other people so we make sure we are very competitive." He argues that prices can be reduced by cutting away the layers of unnecessary costs. "If I ever make a contribution to this industry, I think it will be because a very big percentage of the cost of what the customer pays goes to negotiating with the client or contracting."

Stelios says this "horse trading" can be cut away via the easyOffice online booking facility. Instant Offices' Hamilton argues that this side of the venture could have huge implications for the sector. "There is currently no operator globally that allows you to go online to book and see a price upfront. It is very innovative." For Stelios, the "make or break point" of the venture will be whether people book online. Prices for rooms for a week will vary from £100 to £400 depending on its size. "People will either take out their credit cards and start trying to make a booking or telephone to discuss it."

And then prices will be adjusted via what Stelios terms yield management. "It's not exactly rocket science," he says. "You have four rooms with one workstation each. You put the first one that goes at £100 a week, the second at £105, the third at £110 and the fourth at £115 - it's elementary."

Another important factor will be the speed at which the businesses can take space. "You can't do a deal in less than two to three week with Regus," he points out. "When I wanted to find space for EasyCruise in Dubai we tried to take space with serviced operations and it took us a month to do a deal. I kept calling my partner there saying, "'why can't you sign the bloody contract?'"

It is likely that Stelios's rivals in a sector that often complains that it does not get enough publicity will welcome his interest. But they should not expect a brief flirtation. "We have launched 17 easyGroup lines now, from easyJet to easyCruise to easyPizza, and all of them are still trading."

How The easyOffice Business Is Split

easyOffice is split into two businesses along the lines of easyHotel. The first is easyOffice's serviced office space, which the easyGroup is pursuing alone.

The second is a one-stop serviced-office brokerage, offered on the EasyOffice website in partnership with the serviced office broker Instant Offices. The tie-up, which gives EasyOffice browser access to details of around 5,000 properties globally, is the brainchild of Instant Offices founder Robert Hamilton.

For Hamilton, the move makes perfect sense. "The big strength with EasyGroup is that it is consumer focused and, in our sector, while it is consumer based there are few consumer-focused brands."

Stelios says the tie-up which allows his business to take a slice of any revenues created for Instant Offices by the site, is an obvious way of tapping into the power of his brand. "A lot of interested people won't feel fulfilled by the fact that there is only one site in Kensington on offer currently, so you go on the site and look at the other options," he explains."Our brand has the ability to attract a disproportionate amount of publicity and we are just looking to try and nurture that pent-up demand."