Senior living companies appear to be in a race to outdo each other on the high-end, creating ever more luxurious and extravagant buildings and services. Beauty salons have given way to full-blown spas; dining rooms now include wood-fired pizza ovens and computerized wine bars, with food prepared by celebrity chefs; and rather than movie nights and bridge clubs, providers are creating elaborate lifestyle programs around interests such as art and culture or business and philanthropy.
It’s fun and inspiring to report on these luxury projects (and a blast to visit them). But is it wise for providers to compete by upping the ante on luxury?
I wonder if senior housing should take a closer look at what’s happening in the airline industry right now, where I think there are some comparable trends—and signs that the way to winning consumers’ hearts, and business, is not by investing in ultra-luxe goodies and services.
Like senior living, the airline industry has shifted toward offering a more premium product for its high-end customers, who are contributing significantly to margins in an otherwise embattled business. It’s a phenomenon that has been tracked by the International Air Transport Association (IATA).
The problem is that it’s become a rat race, as Skift recently reported:
“Dramatic improvements made to the premium passenger experience over the past 20 years have resulted in short-lived returns for full-service airlines, soon changing from delights to minimum expectations. For those who work in the sector—airlines, designers and suppliers—this is hardly news, but it is no less discouraging.”
And here’s what really caught my attention: Passenger satisfaction isn’t even tied strongly to top-of-the-line, premium amenities.
In other words, Airline A puts a passenger in an awesome seat—say, a fully reclining seat with privacy screens, an entertainment center, workspace, individually controlled lighting, etc. Airline B puts a passenger in a less-awesome seat—say, one that does not even recline.
You’d think that the passenger in the super amazing seat would have a high opinion of Airline A, while the other passenger would rate Airline B less highly.
Not the case.
Rather, a passenger’s opinion of an airline is more influenced by the airline’s overall brand rather than its specific offerings, even one as basic and important as a great seat.
“One thing that we’re pretty sure is significant is the brand,” Tim Jasper Schaaf, director marketing and sales for IATA, told attendees at the IATA World Passenger Summit in Hamburg. “We know there are airlines out there that have a much stronger brand than others, and the hard product may not necessarily be different. If a business traveler flies on an airline that doesn’t have a flat-bed in business class, but has a really strong brand, people actually feel great about it.”
Watch the gap
IATA has found that brand power is so strong that it may “override some of the rational emotions of passengers,” Schaaf added.
This phenomenon might be called a passenger perception gap, and it poses one of the most significant challenges to product development for airlines today, Skift’s Marisa Garcia wrote.
Might senior living residents and their families have a similar perception gap? It seems plausible to me, in which case, senior living companies would be smart to focus on building powerhouse brand identities rather than beating the competition with a more jaw-dropping product.
Here, too, senior housing providers might take cues from the airline industry, which has found that brand equity is tied to creating a “whole package” experience that is consistent and pleasing. SAS Scandinavian Airlines has put this in action, according to Johan Magi, head of onboard product and services. The airline not only put in a quality seat, but upgraded the whole cabin as well, including lights and accessories.
“SAS has also enhanced its brand further with a solid on-ground pre-flight product, offering convenient automated check-in via apps and kiosks for all passengers, maintaining lounges for premium and loyalty customers that complement the airline’s brand and generate a pleasant pre-flight environment, and developing new content marketing strategies that relate to their ‘We Are Travelers’ customer base,” Garcia wrote.
The work appears to be paying off for SAS. It reported a substantial year-on-year earnings improvement for the fourth quarter of 2015, which President and CEO Rickard Gustafson attributed largely to the “extensive improvements aimed at frequent travelers.”
A senior housing company might also look at each touchpoint it has with residents and prospects, and ask whether it is creating a similarly streamlined, all-encompassing experience. And SAS is far from the only model in the aviation industry that could prove useful. Senior living leaders might want to look at the brand-building strategies of Emirates, Turkish Airlines, American Airlines and others on Skift’s “30 Best Airline Brands” list.
Consider the case of Emirates. The airline grabbed the No. 1 brand honors for 2015 despite receiving negative press, having to navigate politically sensitive controversies, operate within a not-always-friendly regulatory framework, face down competitors’ accusations of unfair practices, all while having cabins that have become “a bit dated.” Sound like challenges familiar to senior housing?
There are major differences between the airline and senior living industries, obviously. But senior housing has benefited from other practices that were pioneered or quickly embraced by aviation. Dynamic pricing is one example. Checklists is another. In both those cases, senior housing was late to the game.
Airlines and hospitality providers embraced dynamic pricing 20 years before senior living, former Holiday Retirement CEO Kai Hsaio noted at last year’s Senior Housing News Summit. Checklists came to aviation in 1935, were adopted by acute care providers starting around 2009, and only now are having a notable impact in senior housing, with Brookdale Senior Living achieving strong results.
So, the success of these innovations when they finally landed in senior living might be incentive to take a harder look at what airlines are doing around brand building—and without too much delay.
Written by Tim Mullaney