Innovate or die. Adapt or go under. The general coffee-break consensus among delegates was that this was the major ‘take home’ message from this week’s Retirement Villages Association (RVA) Conference in Sydney, attended by JUDE BARBACK.
New Zealand’s retirement village industry is still very much in the throes of a golden era. Since the GFC, a rising property market and strong economy has meant, as RVA executive president Graham Wilkinson remarked in his opening address, that the industry’s growth has been “sensational”.
But in such boom times there is a feeling of slight unease; that at any moment things could change: the property market could plummet, interest rates could change, or consumers will want something entirely different.
“We’re probably at a dangerous time,” said Wilkinson, a musing that was echoed by ANZ’s Richard Hinchcliffe’s suggestion that the ‘perfect storm’ that has been buoying the industry could end at any moment, and Dr Kay Saville-Smith’s surfing analogy of the likelihood of being dumped by the wave you are riding.
The big questions for operators were: are you ready? Are you constantly evolving and how?
It was great getting a peek into the ways that operators are choosing to differentiate themselves. Although the podium examples tended to come from larger organizations, many accountable to shareholders, the coffee-break chat among delegates confirmed that many smaller providers were doing exciting things too.
Although New Zealand’s RV sector is diverse with its mix of standalones, independents and not-for-profits, it is ultimately characterized by the large corporates – known by the public more for their sharemarket performance than their care and lifestyle offerings.
So it was refreshing to hear Ryman Healthcare’s retiring chief executive Simon Challies speak about how Ryman has taken great lengths to change this. While Ryman senior managers – “Rymanians” – and shareholders were getting giddy with the growth and the company’s commercial success, the internal ratings revealed a high level of staff dissatisfaction. When increasing staff pay rates didn’t improve the culture, Challies realized they needed to take a more “off the wall” approach. They engaged with designer Annah Stretton to deliver a new range of staff uniforms, and then launched a ‘Kindness’ campaign spanning all villages across both sides of the Tasman, to tremendous effect.
Challies’ presentation – his first and last at an RVA conference – brought the audience to its feet in recognition of Challies’ role and influence within the sector.
Former Air New Zealand chief executive Rob Fyfe’s highly entertaining and colourful account of giving the airline a personality also revolved around this theme of investing in and valuing staff.
As delegates heard, innovation can take many guises. BeGroup’s Guy Eady said there were many areas for differentiation within a RV business. Operators can be innovative through their choice of location, their build and design selections, their contracting, their care provision and delivery, and their service offering.
The DMF (deferred management fee) model is increasingly finding its way into care provision. Eady highlighted the BeGroup’s Rawhiti village as an example of a facility that will apply a DMF contract to all its units, whether independent living or care.
While the DMF is well established in New Zealand, Andrew Joyce and Martin Oettli’s study tour proved this wasn’t the case in the United Kingdom, and that their market was ripe for disruption. Enter Cliff Cook and his bold and complex journey to introducing the DMF to the UK.
Care provision presents itself as another area for differentiation. One interesting take on this was Henley on Broadwater’s Patrick Smith’s, who believed the delivery of care should appear “invisible”.
Arguably the biggest threats to the RV sector are the changing social demographic trends and the possibility that future generations will want something different. Bernard Salt’s generation analysis was thought-provoking; while we know that baby boomers are going to challenge the status quo, there are significant unknowns with post-boomer generations. Dr Kay Saville-Smith talked about the possibility that of the 40-year-olds of today, just 50 per cent will be homeowners, which has significant implications for the future of the RV industry.
The ‘evolve or die’ message was confirmed by the ‘100 years of Wisdom’ panel, comprising Cliff Cook, Norah Barlow and John Ryder. Cook said in 15 years’ time, operators will be selling to a different generation, and have a different generation of workers.
“If you’re not adapting your product, you won’t be part of this industry in 15 years,” he said sagely.
Barlow recalled how 45 years ago the practice on a psycho-geriatric unit was to line elderly people up for their bath. This sounded as far removed as Ryder’s recollection of older people checking into rest homes like motels. Yet both happened in recent history, making anything possible in the near future.
There was some speculation around the role of technology and whether this would aid people to stay in their homes for longer, and some around whether more boutique and bespoke offerings would be expected. Barlow posed the rather grim question of whether RVs would be needed at all.
The sector appears fairly confident that the ORA (occupational right agreement) model is safe, despite scare-mongering from the media. However if anything was certain from the conference, it was that nothing is certain.
“Evolution is important,” said Barlow, “If you’re not talking about it, you’re not going to survive.”