More diversity…more markets?
By Susan Saldibar
While the current boom in senior housing has been great, we’re already starting to see some tightening up. And, as that happens, the strong will get stronger and many of the weaker communities will be at risk of going out of business. So, the future belongs to those who can figure out how to compete.
At the recent Senior Housing West conference in L.A., Steve Moran headed up a session covering issues about people, technology and all the stuff that’s keeping owners and operators up at night.
As it happened, three of the four panelists currently own and operate targeted niche communities; so Steve opened up some really interesting discussion around the benefits and challenges of marketing and running affinity, or shared-interest senior living products.
More diversity…more markets?
Arun Paul, Founder and CEO of Priya Living, an Indian senior living community in Northern California, is bullish on the future of ethnic-centered senior living. And for good reason. He’s well positioned with a waitlist of about 1,300 and a <10% turnover rate. “Everyone is concerned about over-supply these days, when there are huge untapped markets right under our noses,” he said. And here’s what makes those markets ripe for development:
1 out of 3 seniors are foreign born. (The Indian population, his target, is growing at a rate of 8.2%) with an overall growth rate of 2.7%.
Ethnic seniors have a unique set of preferences – language, religion, food, culture – which can’t be met within mainstream communities.
Customized communities are, as Arun puts it, “stickier”. People stay because they have more in common with other residents. They form stronger friendships. So turnover is lower.
Torsten Hirche, President and CEO of Presbyterian Retirement Communities Northwest, concurs that this is a great time to get into niche senior living markets, especially ethnic niches. “We are more diverse as a nation and more accepting of that diversity,” he says. And, according to Torsten, there is great growth in religious niches. He has a thriving Presbyterian senior community to show for it.
But he also points out some challenges that could make it tougher for affinity operators:
Since you are marketing to a specific group of people, rather than a geographic region, you really need to go nationwide with your marketing efforts. That can cost more.
Recruiting can be challenging, as you want people who understand the niche clientele.
There is an expectation from your residents that the staff will be part of whatever the target group is; so LGBT staff, Indian staff, etc.
So, on top of labor being hard to find, you are now in the position to be excluding others when it comes to the labor force.
Knowing what you’re getting into can make all the difference.
Courtney Siegel, VP of Ops for Oakmont Senior Living in Santa Rosa, California, an LGTB senior community is well aware of these challenges. She has experienced some of them first hand as she’s struggled to get her community up on its feet. While she is now enjoying success, she feels that there is this “space” between concept and success that needs to be addressed. She raised a few issues that can pose a real challenge for marketing affinity communities:
You need to go out and find people who fit your niche product.
Then you need to identify the people who actually want your product.
Even if they want it, they may need to relocate to take advantage of it.
That last point can be a deal breaker, since it means a lot more effort, more resources used, money spent, etc. And there are other considerations for the operators, such as the lease-up period that can make for a rocky road prior to actually getting your ROI.
Here’s what Courtney has learned to help smooth out that rocky road:
You need to have your eyes open to all the challenges: money, resources, the need to mount a national marketing/sales campaign, and so on.
Be prepared. If not, you will have some unpleasant “surprises” downstream and have to overcompensate for planning not done on front end.
Are Affinity communities the answer to the 1% question?
Somewhere in the middle of the discussion, Steve raised a question that bears some thought. Will creative new affinity senior living communities help address the market penetration barrier that we seem to be struggling to get past? Some experts claim that if we could just increase occupancy by 1% we’d have every room filled. Well-run affinity senior living communities could be a great way to help do that.
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