Summary: What if senior housing and the hospitality industry could come to each other’s rescue? The hospitality industry has been negatively impacted by Covid 19 and may never fully recover. Shifting some of those goods and services to the growing aged care sector will provide long term economic and social benefits to both.
The Airlines & Hospitality Industry
In the face of a global pandemic, the airline industry is facing unprecedented challenges, which are spilling onto adjacent industries. Without travel, there are no international guests for tour operators, car hire, restaurateurs, waitstaff - and hotels. A recent article in the Swiss press indicated that 23% of the current hotel owners face bankruptcy - and that is, indeed, a major economic impact. But as with many crises it also creates an unprecedented opportunity.
Over the next 10 years, the percentage of population aged 65+ will rise to 25%. (It's currently around 20% in Europe.) The impact of this demographic shift - along with the societal, economic and financial impact - will represent a major challenge across the world. Finding the right solutions to cope will be crucial to assure governments continue providing for their senior citizens.
The overall challenges that governments face include: improving health, quality of life and extended independence; surging care dependency; budgetary limitations; and a shortage of available land or space for elderly housing near city centers and public transport.
Cross sector opportunity
From an investor’s perspective we see that location, fixed operating costs, and occupancy rates determine the level of yields. The hospitality industry in Northern Europe operates at an average of 65% occupancy rate, and deals with a considerable amount of operating costs. Senior housing, if well-conceived, can deliver the opposite – higher occupancy rates with lower fixed costs. I’ll dig more into these business dynamics in future posts.
To achieve the appropriate operating model, it must allow for: security, privacy and trust; affordable healthcare and support; the ability for social interactions; multi-generational living and physical activities. Without this planning, it can turn into disappointing results for the investor, the authorities and most important of all, the potential older adult resident.
However, with proper identification and re-design, retrofitting hospitality infrastructure could represent a win-win for hoteliers, tenants, authorities and investors searching for new opportunities.
Role of government
Authorities across Europe are seeking suitable solutions to meet the increase in this demand. The hospitality opportunity could help them solve two challenges at the same time: a solution for impacted hospitality infrastructure, and elderly habitat within their own communities. This would require the changing of the building from temporary accommodation to residential status, a concession that would represent a win for all.
Leisure and Hybrid models
Another solution could exist for hotels to keep their occupancy levels at acceptable rates by adapting part of their existing infrastructure into residential apartments. In this context, we see European players like Tabanaa (Belgium) offer the combination of personalised care during your stay at the hotel as well as the booking of your room to your specific needs. The hotel benefits from higher occupancy, and they can focus on providing excellent hospitality services while an external care provider manages the specific care needs of their clients.
The time is right over the coming months to dive in deeper into this cross-industry opportunity. Our goal is to gather a multi-disciplinary group of stakeholders around the subject to join ideas and use-cases around this challenge from the user’s perspective (older adults and family members), hospitality, healthcare, government, finance & insurance, construction and NGOs.
Co-Founder and CEO TRIAVIVA
Aging2.0 Chapter Ambassador, Lausanne, Switzerland
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