Knowing the state of competition and demand will prepare a community for success.
By Susan Brecht, Brecht Associates
The market for all types of seniors housing is becoming increasingly complex.
Service-enriched communities not only compete with each other, but now face a growing number of active adult (55+) communities that are actually drawing most of their residents in their early to mid -70s. While this type of product was typically offered on a for-sale basis, now there are many that are structured as rental communities.
Mixed-use communities serve mixed ages and may have the benefit of being co-located on a site that includes retailers of many types including restaurants, shops and even a library and a fitness center. Walkability is prized by many who want to simply go out the door and find many options for shopping and entertainment.
For-profit organizations are now competing with nonprofits. The number of single-site providers is decreasing and multi-site providers are growing through mergers and acquisition. According to the American Seniors Housing Association, the top 50 owners have as few as 10 properties and the largest owns 735. The Leading Age/Ziegler 200 report for 2018 revealed that multi-site nonprofit systems ranged from 390 units to nearly 20,000.
Older communities may feel threatened by new entrants into the market that have more contemporary designs in both their residential units and community spaces. Occupancy levels definitely are less than ideal.
Overall occupancy across product lines was at 87.9 percent at the end of the third quarter of 2019 and barely rose at all to 88 percent by the end of the fourth quarter, according the most recent information from the National Investment Center for Seniors Housing and Care (NIC). Of course, that will vary from market to market, and by product type as well.
Know your rivals
Have you or your board asked when was the last time you updated information on your competition? Do you know what’s in the planning cycle?
Knowing what your competitors are up to is so important to your own marketing and positioning efforts. It is important to know what’s going on.
The competition may be making changes like converting some traditional assisted living units to memory care, expanding independent living, combining smaller units to make larger, more marketable apartments or developing a satellite campus. They may be “right-sizing” their mix by level of care, particularly if they primarily rely on internal transfers to skilled nursing. And are they changing their financial format?
An entrance-fee community might now offer a rental option or may have added different entrance-fee prices for the same units, based on the level of refundability selected by the new resident. Is there a cost differential between those who move through the continuum versus those who may just enter at the assisted living level?
Many organizations that have been facility-based are now offering respite care as well as non-residential services such as adult day care, out-patient rehab and even continuing care at home. The LA/Ziegler 2018 report indicated that approximately 45 percent of the participants offer some type of home and community-based services to non-residents.
All of these represent ways to reach a market that is not yet ready to move in but these organizations may become their preferred provider when they areready.
Updating information on competitors can be done with telephone calls or some on-site visits, and should be done routinely about every 18 months. This update should definitely include finding out what new communities are being planned.
How do you find that out? Calling planning departments in your market area is one way, as is having your consultants check the Dodge Report for your area or seek that information from NIC.
Where do you stand?
And while you are investigating how your community is doing in its marketplace there are two categories of seniors who can provide you with valuable insights.
The first are you current residents. It’s great that they selected you. But what made them decide to move to your community? How often did they visit and what did it take to make the sale? Did they consider other communities and, if so, which ones and why? Did they visit or just call for brochure and/or look at websites? Do they have friends or know others who have moved there?
Perhaps of greater importance would be what you can learn from your lost prospects. A prospect should only be considered lost if they actually visited your community but didn’t move in. Someone who simply called for a brochure hasn’t gone far enough into thinking about making a decision to provide the added value of one who took the time to visit your community and meet with your marketing personal.
Your marketing department will have their contact information. Reaching out to these folks needs to be handled carefully and it should be made clear that the information they provide will be held in total confidentiality. In other words, they will not personally be identified.
The best way to conduct these surveys is to work with an outside organization. This will assure the people who are being interviewed that they should have no concern about sharing their thoughts with an employee of your community. With an independent, third party asking the questions, an organization is able to get much more honest feedback.
What kinds of things might you learn? Perhaps they didn’t see a unit that met their design criteria in terms of the size and arrangement of the space. They may have felt that they saw too many older, frailer residents sitting in the common areas. They may not have like the meal plan that you offer.
This valuable information, in turn, provides you with what you need to plan and position your community to be more attractive to the consumer.
These types of activities should be part of your overall marketing program. Clearly the more you know, the better poised you are to continue to succeed.
Susan Brecht is president of Brecht Associates, a consulting firm serving the seniors housing industry.