A new generation of older adults is entering the senior living industry, but operators vying for their business can’t simply rest on their laurels.
The baby boomers are bringing with them a range of desires and needs out of senior housing communities, and to attract them, operators need to shift their perspective by listening and catering to them. For many companies, that is easier said than done.
Instead of laying out a product for baby boomers to adapt to, operators should instead spend time determining what it is they want — something Arrow Senior Living CEO Stephanie Harris thinks many operators still haven’t grasped in 2023.
“We’ve got to change the paradigm in how we listen to the residents,” Harris said during a panel at NIC 2023 Fall Conference in Chicago. “The industry has historically done a lot of telling people when they can eat and what they can do, and we’re realizing that doesn’t work for today’s consumer.”
As senior living operators prepare to attract the boomers, they are competing not only with other companies in the industry, but those outside of it. Today, brands including Margaritaville and the Walt Disney Company (NYSE: DIS) — not to mention restaurants, hotels and other goods and services — are shaping boomers’ preferences. And although senior living operators don’t need to develop sprawling 55+ developments to stay competitive, they will need to cater to these preferences in the future in some way, both in the kinds of products they are offering and how they are marketed and sold.
Altering ‘lines of communication’ to attract new consumers
The old way of doing business and interacting with residents is out the window, too, Harris said.
“Part of leaning in is figuring out how to alter those lines of communication and developing collaboration and how we create a more cooperative business model where residents help determine the direction the business takes or community goes,” Harris said. “The core movement we have to do in finding and listening to the next generation is really opening our ears in those lines of communication.”
Senior living operators over the years have made the case that looming demand will be a tide that raises all boats. But with market penetration still hovering around 10% nationally, there’s still work yet to be done in attracting the new entrants into the space.
From more choices to healthy living, the industry has spent years preparing for the pivot to capitalize on demand as more tech-aware customers demand more from today’s operators. A recent report from the American Seniors Housing Association (ASHA) in June shows the boomers will value services and amenities, forcing operators to expand life enrichment options.
It’s not just wellness and life enrichment planning, either. Designers and builders are looking to create next-gen communities to attract the boomers, even as challenges getting financing for new projects and a high cost of doing business remain.
Among the things that boomers want is a connection to their local community. Eight out of 10 of adults aged 65 and older want to stay in their local community and age in place, according to a 2021 AARP survey.
It is for that and other reasons that some operators are trying to find new ways to foster intergenerational connections among residents and people who live in their local area.
“There’s a gap there between the people that want to do something, and then what they have,” AARP Vice President of Family, Home and Community Rodney Harrell said during the NIC panel.
Another way owners are attracting the next wave of customers is through lower acuity offerings like active adult, which has seen a run on demand for the product, despite development headwinds. The active adult space has also been able to attract a customer that is an average age of 72 to 74 years-old, a recent NIC note from February states.
“The reality is, your independent living is still attracting people that are 80 years-old and everyone is trying to attract 10 years younger than that,” Headwaters Consulting Principal Brett Robinson said during the panel. And Robinson would know, having worked as the managing director of sales for Greystar’s active adult division from the beginning of 2020 until September of this year.
Data sharing, marketing to widen penetration rate
Senior living operators have relied on ownership groups for data just as vendors in the space continue to bring new and actionable data points to bear.
Increasingly, vendor groups like Direct Supply can help inform decisions for operators as they seek market analysis and other demographic data points. Over time, Harris said she believes the space will only share more open-sourced data between organizations, despite competing for the same consumers.
“The contributions vendor groups are making to really support the industry are important,” Harris said. “It’s going to be every one of us data-sharing.”
But that data sharing won’t just be internal, panelists said, noting the need for sharing information with the public to inform consumers of their future options when it comes to senior living products in their respective market.
“The big question is how can we ensure the value sustainability and appeal of the 55+ living across the product spectrum,” Foster Strategy Principal Helen Foster said during the panel.
Middlemarket, more ‘dynamic model’ needed
Harris’ Arrow Senior Living has a focus on middle-market senior living, an area fraught with challenges and tight margins. But the affordability of senior living will impact and drive future consumer habits, Harris said.
“Our greatest opportunity is going to be that middle part again, and I think that the dynamic pricing model is going to be something that is necessary,” Harris said. “Even in higher-income markets it will create opportunity, and for individuals, that’s going to be very important.”
That means the industry needs to change its business model to a more “dynamic model” that is more transparent, easily understood by customers and one that raises public awareness about senior living, Harris added.
“The best way for us to really get up and really get a bit more creative is how we change our pricing structures and our own operations,” Harris said. “We’re figuring out how to price appropriately to create something that casts a wider net.”
Harris lamented a “generational issue” regarding a perception that middle market senior living is a product “for the poor,” and operators can break through that by having dynamic pricing structures and adaptable models to adjust on a market-by-market basis, Harris said.
Robinson highlighted the success of active adult as a way to raise awareness of senior living and bring people into a provider’s sphere of influence prior to moving into a traditional continuum of care community. He also touched on the success seen by Greystar’s Album active adult portfolio, along with entertainment giant Disney’s Storyliving residential project that includes a significant component of active adult units.
“The baby boomers will create a lot of their own activities, so I think that’s something to think about as we’re planning our lifestyle programming,” Robinson said.
Senior living operators must also consider the profile of an older adult that still chooses to have a full, or part-time, job, and in-turn changes their lifestyle habits, Robinson said.
“You look at a typical active adult community and…people are still working,” Robinson said. “So they don’t want the happy hour at four o’clock. You know, they’re like, what, six o’clock or 630?
In the future, Harris said providers need to be “open to ideas that we don’t know” to bring more customers into the fold.
“If they are not going to understand what we offer, it’s a conundrum but I think that real estate isn’t the challenge, it’s going to be our style of marketing and our operational excellence that will differentiate that,” Harris said.