342 | Live Long and Prosper: Hospitality industry embraces senior living

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LEVELS OF INVESTMENT AND CARE: An architect drawing of the courtyard at The Parc, a senior-living community under development in Upper Marlboro, Maryland. The 218-unit apartment complex is set to open next year with a mix of residences designed for independent living, assisted living and memory care. The Parc is one of two senior-housing projects in the mixed-use development called The Sky Bridge at Town Center and managed by Watermark Retirement Communities. Modern senior housing calls for hospitality professionals to apply their knowledge and expertise in design, management and customer care to serve in a $500 billion real estate sector that’s growing in population and economic impact.

Business fundamentals, best practices of hotel ownership, operations apply to senior living, say industry leaders

Since she was a teenager volunteering at senior-living facilities in Boston, Serena Lipton knew she wanted a career in senior housing. But she had a difficult time finding the college program she believed would educate and prepare her to serve in the industry.

After graduating from Boston University School of Hospitality Administration and working as an analyst for JLL’s Senior Housing Valuation Advisory, Lipton finally found what she was looking for. This fall she enrolled in BU’s Master of Management in Hospitality with a new concentration in senior living. She and other students are on the cusp of what BUSHA believes is a massive shift in how Americans view aging and where opportunities lie for the hospitality industry.

The program’s goals are supported by in-depth research of the aging population.

In his book, “The Longevity Economy,” Joseph F. Coughlin implores communities and corporations to prepare for the unprecedented growth of a worldwide population that’s dominated by people aged 65-plus.

In fact, the large demographic of older people is already here, thanks to the post-War World Two Baby Boom and people living well into their 80s and beyond.

‘LONGEVITY ECONOMY’: Joseph F. Coughlin is founder and director of AgeLab at Massachusetts Institute of Technology.

Coughlin is founder and director of AgeLab at Massachusetts Institute of Technology. He writes that, as of 2015, the world is “chock full” of older people.

Today, 617 million or 8 percent of the world’s population is aged 65 years old and older. By 2050, that global demographic will reach 1.6 billion or 16.7 percent.

That 16.7 percent is the age breakdown of Florida in 2015. In 30 years, we’ll be a world of Floridas, Coughlin writes.

In the U.S., people aged 65 and older comprise 15 percent of the population. By 2030 that ratio will exceed 20 percent. Coughlin dubs it the “Sunshine States of America.”

Older Americans have wealth and, therefore, disposable income. In 2015, spending by people 50 years old and up totaled more than $5.6 trillion. That accounted for an overall $8 trillion worth of economic activity, nearly half of that year’s GDP.

Coughlin said for companies that figure out how to provide value to an aging world, that $8 trillion is a conservative estimate of the prize.

Baby boomers crave and expect to live a better old age than their predecessors. That includes housing accommodations.

LIVE LONG AND PROSPER: Boston University School of Hospitality Administration’s Master of Management in Hospitality program launched this fall with a new concentration in senior living. The school believes it is on the cusp of a massive shift in how Americans view aging and where new opportunities lie for the hospitality industry. Episode 342 of Lodging Leaders podcast explores how hospitality professionals are aligning interest and innovation with what one researcher calls “the longevity economy.”

‘Business School With a Heart’

Leora Halpern Lanz has a lot of responsibilities as assistant dean of academic affairs and chair of Master of Management in Hospitality at Boston University School of Hospitality Administration.

In 2020, under the direction of Dean Arun Upneja, Lanz took on a project to expand the school’s graduate program to include a concentration in senior living.

In describing BUSHA, Lanz emphasizes the school teaches hospitality administration, which takes many forms depending on where it’s practiced.

Lanz and her team were tasked with defining how BUSHA distinguishes itself from a business school.

“We actually consider ourselves a business school with a heart,” Lanz said. “Rather than focusing on corporate culture, we look at human interaction and we look at experiences.”

To be sure, lodging and restaurants deliver product, she said. “But so much of the service that’s extended and delivered is about people’s experiences.”

BUSHA focuses on human interaction in hospitality businesses. “We asked ourselves, ‘How do we take the skill sets for positive experiences and human interactions and extend that?’”

The spirit of hospitality can be imbued in many industries and professions, Lanz said. But BUSHA’s challenge was to find parallels where its undergraduate programs can prepare students to build careers in sectors that align with its core curriculum. Lanz and her team found synergies in health care and senior living.

They decided to focus on senior living in enhancing its master’s program after learning that many of its undergraduates had been interested in the sector before enrolling in the School of Hospitality Administration.

“Over the years, many hospitality professionals have sort of made the transition to senior living and hospitality companies have toyed with senior living as well,” Lanz said.

THIS IS LIVING: The Sherry Lane Bistro at The Preston of The Park Cities, a senior living community in Dallas, Texas, managed by Watermark Communities. The Preston offers assisted living and memory care. It also has a program called The Bridge, which provides a blend of care to assisted-living residents not quite at the level of needing memory care. Watermark’s portfolio and program structures are examples of the varied opportunities the senior-living sector offers investors as well as hospitality professionals.

Student Demographic

Amid the COVID-19 pandemic, thousands of hospitality careerists were laid off or terminated. Many of them have transferred their experience and skills to other industries, including senior living and care.

The School of Hospitality Administration’s master’s program began in September. The senior living concentration will launch in January, the beginning of the second semester.

Three courses are operations, resident experience and the business and economics of senior housing.

Just as hospitality school graduates evolve professionally over the course of their careers, so does the industry as a whole. The expansion into senior living as an aspect of hospitality is an example of that, Lanz said. Master’s students include those who’ve been working in hospitality for the past few years as well as industry veterans interested in adding knowledge and skills to their well-honed resumes.

“We have a fascinating blend of students and that’s what makes the conversations in the classes and the projects so fabulous because it’s such a diverse set of minds that come together to help solve problems, to create these good interactions or these good experiences in revenue management, digital marketing or senior living,” Lanz said.

BU’s School of Hospitality Administration in February announced the senior living concentration. Lanz said the news release was part of the school’s strategy to inform and involve existing senior living employees and the communities in which they serve.

“We are reaching out to senior living companies; we’re reaching out directly to CEOs of senior living companies of which there are many, and we’re reaching out to those who have community in the greater Boston area in particular,” Lanz said. The master’s program is an on-campus program and it depends on senior-living companies to offer internships and jobs for students to practice what they’ve learned.

“There are so many parallels between operations, operations of multi-unit or mixed-use assets, human experiences, guest relations or, in this case, resident relations, market studies and feasibility studies. It parallels the hotel model. There are so many synergies that just make sense.”

SENIORS AND TECHNOLOGY: Joseph F. Coughlin, founder and director of MIT’s AgeLab, writes in a blog that the COVID-19 pandemic forced older Americans to learn to use technology to stay in touch with family and friends. Serena Lipton, a senior housing analyst with JLL and student at Boston University’s Master’s in Hospitality Management with a concentration in senior living, said though technology will solve some challenges, the field will always require human touch and face-to-face hospitality.

Fighting the Stigma

Lipton of JLL enrolled in BUSHA’s Master’s in Hospitality Management this fall. She continues to work in JLL’s senior housing division, which advises investors and third-party managers in the senior living sector on such things as valuations, market studies and feasibility analyses. The practice runs the gamut from active adult to independent and assisted living to memory care and skilled-nursing care.

Lipton notes the senior living sector is not your great-grandparents’ idea of being put away in a facility where people live out the twilight of their lives in relative obscurity.

“A lot of people don’t recognize that the industry has changed so much,” said Lipton, who graduated from BU in 2018.

In helping BUSHA build the senior-living concentration, she learned she was not alone in her desire to work in the sector. “A lot of people, especially those who have studied hospitality, are starting to see the value in this industry and how their skills are highly transferable on every level.”

In her work with JLL, Lipton focuses on the real estate investment aspect of senior living, including valuations, marketing analyses and feasibility studies.

She wants to learn more about what it takes to operate a senior living facility or community, coming face to face with residents and serving their needs.

“This is going to be a great glimpse of what’s happening inside and getting a new set of eyes for me,” she said. “I’m really just excited to earn more about the industry that I love so much.”

Lipton searched for graduate programs to bolster her career and found it was difficult to find what she wanted and needed to know. Many schools couch senior-living in the field of gerontology but Lipton wanted an emphasis on business imbued with hospitality.

“BU recognized that one of the biggest trends right now in the industry is the incorporation of wellness and longevity into senior living,” Lipton said. “It mirrors things about the hospitality industry, where wellness and health are top of mind for a lot of hotel companies in their marketing and in their daily practices.

“BU is really taking the lead on this,” she said. “They’re focusing on wellness. They’re focusing on health and longevity in the space and they’re showing us why this concentration occurs under the umbrella of a hospitality school. The modern-day senior living is fully intertwined with hospitality.”

As with many things in the COVID-19 era, the crisis has dramatically altered outlooks on what the future holds for business and consumer lifestyles.

“The industry is in the process of creating and implementing new developments,” Lipton said. “The operating and finance models that are going to accommodate these new realities for the industry will be the most relevant going forward in the next few years. The pandemic obviously created a huge amount of disruption but, as with any other industry that has been significantly affected by the pandemic, there’ve been so many new things that came to life that maybe were accelerated by this.”

INVESTOR CONFIDENCE: In its spring investment outlook, JLL reported, on a quarterly basis, seniors housing transaction volume totaled $2.4 billion in the first quarter, a 31-percent increase from the prior quarter. It is “the highest quarterly volume since the onset of the pandemic, indicating a tempered return of investor confidence,” JLL writes.

Investment of the Future

JLL reports valuations in senior housing and nursing care facilities were declining pre-pandemic. Last year, transaction volume fell 48 percent year-over-year to $9 billion.

This year, the outlook is more positive as demand as significantly increased. More than half of respondents in JLL’s investor survey said they plan to increase their exposure to the sector in 2021. More than a third of investors said assisted living is the most-sought-after investment opportunity this year.

Like hotels, a senior-living asset’s value depends on its cost efficiencies as well as level of customer service. Also, like hotels and other hospitality enterprises, senior living is dealing with a labor shortage.

And, like hotels, COVID-19 safety protocols as well as the shallow labor pool are leading senior living operations to turn to technology for solutions.

But Lipton believes both sectors will thrive and grow when they focus on human touch, personal care and interaction, things technology cannot replace, especially in the senior living sector.

“Overall, the industry is growing at such a fast pace. In the next few years, it’ll be $500 billion real estate sector,” Lipton said.

“The staffing crisis is always top of mind for this industry, and that’s a big part of what inspired the BU program as well. During the pandemic, the first industry to fall very quickly was the hotel industry. With that a lot of students graduating from hospitality schools across the U.S. are left with a choice, like, ‘Do I wait this out? Do I find a job in a different industry for now?’ And that’s a hard choice when you’ve had such a niche field of study for the past few years. So this program comes at a time where students are able to say, ‘OK, this is something different I can try right now. This is something that might be more sustainable than hospitality.’”

Looking Forward

Besides new hospitality school graduates looking to work in parallel fields, Lipton sees hospitality professionals rethinking their current career choices and exploring where they can transfer their skills into a new service sector.

“There’s a growing number of lodging professionals that are giving the seniors housing sector a serious look now. And there are a lot of hotel lodging professionals looking at the industry with a fresh set of eyes after this entire past year,” she said. “There’s just a huge amount of projected investment growth and development that’s going into the senior housing space. Hospitality professionals have a huge, huge pool of opportunity in the space.”

Lipton also believes the integration of hospitality and senior living will create new career roles, including hospitality consultants who work in senior-housing communities.

“It’s not just going to be the traditional executive director or recreations director and managers of hotels. There’s just going to be a whole new set of jobs that comes out of these two industries joining forces.”

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FEATURING
  • Leora Halpern Lanz

    Assistant Dean of Academic Affairs and Chair of Master of Management

    Boston University’s School of Hospitality Administration

    LinkedIn Profile

    Website

  • Serena Lipton

    Analyst

    JLL’s Seniors Housing Valuation Advisory

    LinkedIn Profile

    Website

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