Go onto any airline website to book a flight and you’re likely to find not one but many prices, depending on the date, time and market factors that exist at the time you’re shopping.
The same is true for hotel rooms. Book a room during a busy conference season, and it may be one price, while in the off-season, it’s another. Likewise, the view might make a difference in the price; or a corner room may go for more than a standard with fewer windows.
But shop for a senior living community, and instead you’re likely to find a set price listed for each community you explore, sometimes with a discount that may be offered upon further inquiry, and often with room to negotiate on price.
Senior Living Falls Behind
Senior living is largely behind on the trend of dynamic pricing, which has long been the norm in other industries such as hospitality, air travel and even in retail.
“Senior housing is about 20 years behind hospitality and multifamily on a sophistication level, especially when it comes to revenue management,” said Holiday Retirement CEO Kai Hsaio at a recent Senior Housing News industry summit in Chicago.
Holiday is leading a slow charge to change that by offering pricing for its units that changes—every single week.
Through a propriety system, the senior living company uses an algorithm to set its rates based on factors like seasonality and demand, but also other elements: what existing residents pay for rent; recent lease amounts; a supply and demand forecast; square footage; amenities like balcony and view; the average apartment rents in the area; and income levels of local households.
“Doing discounts is a dangerous position,” Hsaio said. “It’s a slippery slope. The proprietary system prevented us from going down the discount angle.”
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Adopting a New Approach
Moving from set pricing to dynamic pricing is not a shift that can be completed in a short time, Holiday says. While the company completed its full transition across all communities last fall, a phased approach was necessary, its sales and technology executives say.
The initial rollout took place across just four communities after Holiday came to the realization that pricing as many as 30,000 units correctly and consistently was simply not possible.
“We had work to do upfront to make sure all of our data was clean,” says Sheila Donahoe, chief information officer. “It’s a big input into the system. Then there’s ongoing tweaking and tuning. We would get on the phone weekly with [our partner] on that.”
But ultimately the calculated approach served not only the company as a whole, but the sales staff who had to adjust to it.
“The fact we rolled out in such a strategic way, where we started with a really small amount of communities and then added [others], allowed us to work out the kinks as we went along,” says Shamim Wu, executive vice president of sales.
Rather than resisting the change that sometimes comes with new systems and technology, as the initial communities moved to the new system, sales staff were actually eager to adopt it, Wu says.
“By the time we did the full rollout, salespeople were begging for their teams to get their regions or districts onto the dynamic pricing system,” she says.
Moving Prices and Sales Strategy
While there was sales training involved in the transition, the staff largely embraced the change as taking one sticky selling tactic out of the equation: negotiating.
“It gave sales leaders so much confidence in selling, and took so much ugliness that happens out of the process. There was no more haggling,” Wu says. “This allowed people to focus on the important reasons people move into senior living: health, welfare and wellbeing.”
It also presented a time element to the sales process that didn’t exist before, because prices change every Monday. Salespeople can share the current rate with prospective residents in their families, but also candidly explain that the price is subject to change within a week.
Holiday is completely upfront about the system and says it hasn’t had to retrain the customers who now use it.
“There was no specific marketing around this,” Donahoe says. “They are accustomed to it from different industries.”
Written by Elizabeth Ecker