Just over a year after announcing several major changes—including a move of its corporate headquarters across the country and abandoning its longstanding management model—CEO Lilly Donohue says Holiday Retirement is in “put-your-head-down mode” and focusing on improving the resident experience.
The nation’s largest independent living provider has experienced an enormous amount of upheaval in the past 18 months. In February 2017, Holiday announced it was scrapping its long-time management model and implementing more conventional one. In April 2017, the company announced its move from Lake Oswego, Oregon, to Winter Park, Florida. Just prior to that announcement, Holiday hired Dr. Bill Thomas as its first-ever chief wellness officer, and in August 2017, the provider launched a new venture providing services in people’s homes—Milo—with Thomas’ help.
Despite all of these changes, Holiday is currently outperforming independent living occupancy benchmarks, Donohue said. Without going into specifics, she noted that Holiday’s occupancy is currently greater than 90.3%, which was the average independent living occupancy nationwide in the first quarter of 2018, according to the National Investment Center for Seniors Housing & Care (NIC).
Still, growth at some of the provider’s properties has “lagged expectations,” according to New York City-based real estate investment trust (REIT) New Senior Investment Group (NYSE: SNR), which in May announced it is repositioning its 51-property Holiday portfolio to encourage Holiday to improve its financial performance.
Donohue, who was named CEO in January 2016 after spending over 20 years at Holiday’s parent company, Fortress Investment Group (NYSE: FIG), is aware that Holiday is far from finished when it comes to getting back on track, financially and otherwise.
“I think we still have a lot of work to do—but you’re going to start seeing some really terrific returns,” she told Senior Housing News.
Right-sizing in Florida
When Holiday moved its headquarters from Oregon to Florida, about 200 jobs were reportedly impacted, and the size of the corporate office was meant to shrink.
Cost-cutting “absolutely” played a part in the decision to move Holiday’s corporate headquarters across the country, Donohue said.
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“We all have to be smarter about how we operate, and we certainly can’t be operating at a loss,” she explained.
At the same time, certain corporate office positions were eliminated—and entire departments were cut—to facilitate more decision making at the community level, according to Donohue.
“We were starting to make very local decisions further and further away from the resident,” she explained. In eliminating some of the decision-making roles from the corporate office, Holiday empowers employees to solve local problems at the community level, she suggested.
Winter Park, Florida, stood out to Holiday as an ideal home base due to Florida’s “huge service industry,” the state’s growing aging population, and Orlando’s international airport.
“Our ownership group [Fortress Investment Group] also has lots of activities in Florida,” Donohue said.
In Oregon, Holiday’s home office had approximately 240 employees. Currently, Holiday’s home office has 157 employees, and there are no plans to grow the size of the corporate team.
“That feels like a good size to us,” Donohue said.
Live-in manager retention issues
In May 2016, Holiday began to transition away from its live-in management model, in which employees acting as executive directors lived full-time in Holiday communities, and, as a result, were theoretically prepared to address residents’ needs at any time of day.
The move resulted in greater-than-anticipated occupancy declines at Holiday communities, according to New Senior Investment Group, and though it was “traumatic,” occupancy has improved over the past few quarters, National Health Investors (NYSE: NHI) President and CEO Eric Mendelsohn said earlier this month.
Originally, the decision to end Holiday’s live-in community manager model and instead hire traditional executive directors was made primarily due to the role’s retention issues, according to Donohue.
“Although it was a fabulous model that worked very well when the company was founded, over the last decade finding and securing live-in couples was becoming harder and harder to do—both from a satisfaction perspective and a retention perspective,” she said.
It’s difficult to strike a quality work-life balance when you live where you work, she noted. Plus, unlike traditional executive directors, live-in managers tend to “manage to their loudest customer,” which isn’t fair to other residents who live in Holiday communities.
All the while, Holiday felt it was investing time and money into training potential live-in managers who would eventually decline the promotion due to the nature of the role.
“We were training really good and strong employees who would end up leaving for our competitors because they didn’t have a spouse to move in with,” Donohue said.
Focusing on residents, employees
Looking ahead, Holiday is focusing first and foremost on improving the experiences of its residents and staff, as some of its moves in the past year are meant to indicate.
“We’ve changed our story,” Donohue explained. “Our story is all about the resident experience now, and the associate experience.”
Hiring Bill Thomas is one step in this direction, she said. Thomas, a Harvard-trained geriatrician, is also a well-known senior care pioneer and the originator of the Green House senior housing model.
Holiday may have hired Thomas to be its first-ever chief wellness officer, but he’s really the company’s “happiness officer,” Donohue said. Various workplace experts have recently advocated for hiring “chief happiness officers” in industries struggling with employee recruitment, retention and satisfaction, like senior housing.
The company is also changing its approach to hiring, and at times it’s having an interviewee’s would-be colleagues do the interviewing.
“We’re doing all of these things so our customers can really have a better experience and choose Holiday,” she said.
Along those lines, Holiday is striving to continue to serve the middle-market consumer.
“We are not your high-end product,” Donohue said. “I am darn proud to be mid-market.”
The average market rate for the company is $2,640, according to a spokesperson.
Areas for improvement
When it comes to its at-home services platform Milo, though, Holiday is not necessarily where it would like to be. Currently, Milo services include home visits, chef-prepared meals and technology such as a wearable fall-detection device.
“We’re still in it, we’re still actively testing … I wish it would grow faster. But I still think there are incredibly great prospects,” Donohue said of Milo.
Donohue knows that Holiday is “not perfect,” but she’s pleased with where the company is headed. With respect to facing industry challenges, Holiday is not an outlier, as other big-name senior housing players like Ventas (NYSE: VTR) and Welltower (NYSE: WELL) have recently shared struggles related to oversupply, occupancy and staffing.
Holiday’s also not the only large senior housing provider that’s in the middle of what some might call a turnaround. Brentwood, Tennessee-based Brookdale Senior Living (NYSE: BKD), the largest senior housing provider in the country, has a “significant amount of work” to do before its turnaround is complete, CEO Cindy Baier recently said.
All of the hard work will be worth it, Donohue suggested.
“I really fell in love with this industry—but I have never worked in a harder job, frankly. I am literally inspired and appreciative of all the work that happens inside of a community,” she said. “I’m so excited about Holiday. I think our focus on our people and our residents is in the right place.”
Written by Mary Kate Nelson