EXPERT OPINION: A Conversation with Margaret Wylde
June 16, 2010
In this "Expert Opinion" interview, Margaret Wylde, President and CEO of ProMatura Group, discusses the seniors housing industry and the fundamental changes seen in the last few years as a result of the economic upheaval.
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Margaret Wylde founded the ProMatura Group, LLC in 1984. Since its beginning as a division of a private not-for-profit research institute to its present form as a for-profit privately held company, ProMatura has focused on the application of statistically valid research to the solution of everyday decisions for age-qualified and all-age housing managers and developers, builders, consumer product developers and service providers.
In addition to scores of strategic planning, marketing audits, feasibility studies and marketing, branding and positioning engagements for age-qualified housing clients, ProMatura has recently completed several major national research projects sponsored by the American Seniors Housing Association, the National Investment Center for the Senior Housing and & Care Industries and the Assisted Living Federation of America Industries and the Seniors Housing Council of NAHB.
Wylde serves on the Board of Directors of the American Seniors Housing Associations, and has served on the Boards of the American Society on Aging, National Association of Senior Living Industries, and the Seniors Housing Council of the National Association of Home Builders. She is a frequent invited speaker at many conferences and programs throughout the U.S. and Canada and speaks approximately 30 times each year. Wylde is a member of the faculty of the Erickson School at the University of Maryland in the Executive Development program for the age-qualified housing industry. Wylde has been a member of this faculty since the inception of the executive program at Johns Hopkins University.
Wylde has authored five books, dozens of technical papers and articles, and is a prolific contributor to trade and business publications and scholarly journals. Wylde recently authored, Right House, Right Place, Right Time: the Community and Lifestyle Preferences of the 45+ Housing Market that was published by BulderBooks in January 2008. Her other books include Boomers on the Horizon: Housing Preferences of the 55+ Home Buyer published by BuilderBooks in 2002, Building for a Lifetime: The Design and Construction of Fully Accessible Homes published by The Taunton Press. Wylde received the Icons of the Industry award from the 50+ Housing Council of the National Association of Home Builders "in recognition of substantial and lasting impact on the seniors housing industry" in May 2007, in Denver, Colorado. She is one of only five people that have received this award, and she is the only woman to have received this award.
President & CEO
ProMatura Group, LLC
19 County Road 168
Oxford, MS 38655
Office: 662-234-0158 xt. 0413
Watch the video of the interview:
I have the pleasure of being here today with Margaret Wylde. She is the president and CEO of ProMatura Group. Everyone knows them, one of the leading, if not the leading, market study and seniors housing trends companies, doing most of the work with the NIC MAP. So, she has been following everything that's been going on in the seniors housing industry for quite a while. Margaret, you've been analyzing this industry for so long, has there been one fundamental change you've seen in the last few years given all the economic upheaval?
I wish I could say that there was. That's the one question I've sort of left blank.
Don't tell me that.
You would think that there would be more change than there has been and that people would really recognize that the old way of doing business, to a certain extent for many people, should be changed, because we need to make improvements in how we do business, particularly for a community that's built. I guess the big change is that nothing's being built. Where I'm not seeing sufficient change is really people understanding what consumers want and what is going to make them happy, what they'll pay for, et cetera. So, no, I haven't seen a whole lot. Sorry.
Well, with the current housing and economic downturn, when you do your work, have you changed any of your analytical tools or metrics in terms of determining what local market demand is?
That we have done. We developed our own demand model many years ago and have updated it a number of times because it is based off large-scale consumer research studies among households who say they are considering moving and would consider moving to age-qualified, service-enriched housing.
We identify the proportion who are very likely or likely to move to each of the different types of service-enriched housing, so independent living, assisted living, what adult children have parents who would be looking for memory care. So, we know those proportions.
The last time we really did our big update was in the fall of 2006. The numbers didn't change too much, but the demand that we estimated based on that we believe is too high for today. So, what we've done, and we've gone in and done demand estimates in today's market, is we're discounting the demand by the proportion that the home sales have dropped from the average of 2006-2007.
So, what those sales were then to the home sales pace in that specific market today, we just cut demand by that amount. One of the amazing things is that even in markets where, for example, in one we just did, we discounted the demand by 69 percent, and there was still sufficient demand in the market to fill all of the turnover in all of the residences there. There isn't any new stock coming on the market, so the demand is sufficient to keep everybody filled.
When you've done one of the market studies just in the past that showed there was more than enough demand for a new community, and then the community was built, opened and it didn't fill, is there usually one common denominator problem?
I'd probably say there's two. I know you wanted me to say one, but I can't. One is that I really feel the community was developed based on the pro forma, that the pricing was set to make the community work on pro forma and really was not set relative to what the consumer wants and how much they are willing to pay. That's Number 1, and that we see a lot, unfortunately.
The second one, I would say, particularly based on a lot of the market audits that we do today, is really a function of the salespeople. I'd say 90 percent of our sales people in our industry do not know what they're doing. They had a great ride, but now when the economy is down, we see such significant differences between people. I was working on a report not too long ago where a property that was in poor physical condition, poor location, older property, little bit higher prices at their market share and above, and it was performing fine.
Our client's property that's struggling: better property, prices a little bit lower, unit size about the same, physical plant very nice, but awful, below 70 percent occupancy. It's sales.
Sales. That's a good segue because we all know that with any kind of seniors housing community, the best salesman is the resident.
You came out with a study, original research last year that said if you are very satisfied - I put in quotes "very satisfied residents are more than four times likely to recommend the community than the residents that are merely satisfied."
That is an astounding number at more than four times. How do you get those residents who are satisfied to become very satisfied?
I'll say - how do you get them? Number 1 is you provide them a good quality of everyday living. It isn't the beautiful physical plant. It isn't all the amenities and all the bells and whistles. Those might get them to look at it in the first place, but what keeps them happy is a good everyday life, one where they are in the company of friends. Then that should be for both residents and staff that they have a sense of control. They have flexibility in their dining hours. It's not regimentation. It's flexibility, comfort. They feel this community - they have a sense of home there. It is very much people-oriented.
In that same paper, we looked at 77 different physical plant attributes and about 40 soft attributes: people and policies.
All the 40, probably.
Wasn't all the 40, but the only two physical plant attributes that have an impact on your occupancy are the location and the size of the residences, the individual apartment.
But it doesn't always necessarily correlate that bigger - it is size, and it is their perception of how much that residence feels like home to them. The attributes that had very high correlation with occupancy are satisfaction with everyday life, feeling at home, flexibility in dining and quality of dining. There are five, and I'm probably not going to be able to come up with all of them, but it's huge. It wasn't a little bit of difference. It's a huge difference. So, the investment needs really to be made in people.
Staff, people, atmosphere.
Atmosphere. Because when we go in and do audits with struggling properties, there's two things that really jump out a lot that we've seen. One is the sales staff almost always are the problem, not 100 percent of the time, but almost always are a problem. If they're not the problem, then the other thing we have seen is very low referral rates from residents. If you're more than two years old, if the community has been around for more than two years, you should be getting 60 percent of your referrals for independent living from residents and family, 60 percent of your leads from residents and family.
I mean, when I see communities getting 20 percent - one community that was struggling had less than 10 percent - there's a reason.
Now, we all know we're in a very slow development period right now since it's been dropping dramatically in the last 12 months, but simultaneously, the demand is going to do nothing but increase. Do you have a forecast for what's going to happen when those two opposite things meet each other?
Well, I think we still have to take into consideration that home values aren't going to jump up immediately. So, even though there's less supply coming into the market, there's still going to be a smaller market proportion I believe moving - of demand. But I think what we'll still see if very good communities will do very, very well, and those that aren't so good are still going to be fighting it out, but we should see occupancies increase. I anticipate that we will, but I don't know that it's going to help everybody. People may decide to wait for the better community and not move to the community that is just a place to go.
All right. Thanks for spending time with me. I look forward to your next research report. Hopefully you're working on something new today.
I am, as we speak.
Thank you very much, Margaret.