IWG CEO Warns 2021 Will Be Down Year For Profits, Doubts WeWork's Optimism
One of coworking's biggest figures is sounding warning bells about the industry's fate in 2021 and wondering why his biggest competitor isn't doing the same.
IWG expects to lose more money this year than it did in 2020, when it incurred a loss of £620M, or around $875M, The Guardian reports. Its earnings before interest, taxes and amortization last year were $189M, a number it also expects to be much lower this year, MarketWatch reports. In the first quarter, IWG lost around $880M, compared to $167M in profit it made over the same period in 2020, Commercial Observer reports.
IWG, which is listed on the London Stock Exchange, expects its 2021 performance to be impacted by the continued damage wrought on international economies by the coronavirus pandemic, especially as new variants continue to emerge, The Guardian reports. Though IWG claims its U.S. business is recovering, it isn't enough to buoy the rest of its 3,300 global locations.
Despite the 15% drop in share price that his pessimistic outlook prompted on Monday, IWG CEO Mark Dixon said that he wanted to set realistic expectations, adding that WeWork's projection of reaching profitability by the end of 2021 "would be difficult to achieve," CO reports.
“I mean, [WeWork] is talking positive, but the actual numbers all went completely negative,” Dixon said. “They are so far underwater … it’s going to take a miracle for them to achieve theirs. If they’re able to achieve [profitability], we, as a company, would be very happy, because it will mean we will achieve it as well.”
Like WeWork, IWG is pinning some of its recovery hopes on increased demand for flexible work from large companies. The flexible workspace operator announced in Q1 the signing of a global agreement with U.K.-based bank Standard Chartered that would give all of its 95,000 employees access to IWG's entire network of locations, The Guardian reports. IWG's portfolio includes coworking brands Regus, Spaces and woman-focused The Wing.
WeWork, which is soon to go public through a merger with special-purpose acquisition company BowX Acquisition Corp., reported a $2.1B loss in Q1 inflated by one-time costs such as a settlement with former CEO Adam Neumann. Still, CEO Sandeep Mathrani hasn't publicly wavered from his prediction of profitability by year's end.
As the U.S., and eventually the world, returns to the office, IWG and WeWork may face stiffer competition than ever from traditional office landlords, which have included more flexible space within their buildings as part of new leases and post-pandemic redesigns.