If a single senior living operating organization or REIT were to adopt this strategy in the coming months, they would become the dominant player in coming years.
A few weeks ago, the Wall Street Journal published an article titled “Predatory and Opportunistic: Southwest Airlines Seizes the Moment as Rivals Struggle” (paywall warning).
The Big Idea
Every single airline company in the whole world is bleeding money. We are talking billions of dollars a year, including Southwest. And yet, Southwest is behaving very differently than every other airline in the whole world.
One of the biggest impediments to growth in the airline industry is access to gates at airports. In the best markets, they are impossible to get at any price. It is a bit like acquiring good senior living building sites in hot markets.
The Pandemic Panic
Gates cost airlines money. And even with the pandemic, the airports expect to be paid their gate fees. As a cost-cutting measure, many airlines are giving up their now excess gate capacity. And Southwest Airlines has sent out teams to acquire those gates with plans to add new markets; 4 this year (2020) and 6 more in 2021.
They are not the only airline doing this, but the only one doing it at scale.
Senior Living Opportunity
Read the REIT earnings transcripts and you will see at least hints that they are shuffling operating companies on their worst-performing assets. If you are a great operator, particularly in this very difficult time, you are a prime candidate for those properties.
It is my hope that there will be a huge shuffle in the next 12 months. Because, as painful as it will be for leadership, it will make our industry better. And we need to be better than we are.
You are that operator if you are measurably beating the market averages (even if, like Southwest, you are losing money). You are that operator if you operate differently, if you market differently, if you have used the pandemic as an opportunity to try new and different things.
The Greatest Tragedy
I have had a number of conversations with front-line and mid-level leaders over the past few months who are both afraid and frustrated. They are afraid for their team’s health and afraid for their own health. They are frustrated by pressure from the top to do the impossible and unrealistic, because they see things that could be done, to make things better, but management isn’t listening.
The Worst Example of All
I have heard from several sales leaders that they are feeling extreme heat because there are few to no move-ins in December. They know, we all should know, that no one is going to move-in this month unless there is extreme need. Who wants 10 or 14 days of quarantine over the holidays? Why move-in until you know that move-in comes with a vaccination?
So what ends up happening is that team members work less well and are even less likely to be motivated to go that extra mile.