Hispanic saleswoman talking to clients in living room
(Credit: Jose Luis Pelaez Inc / Getty Images)

After a strong end to 2022 and a first quarter of 2023 that brought “rate integrity” back, a senior living marketing consultant says it is “disheartening” to see rate concessions creeping back into provider offerings.

Bild & Co. CEO Jennifer Saxman told McKnight’s Senior Living that her research team of mystery shoppers found that the most common discounts offered by senior living communities in the second quarter were reduced or discounted rent (13%), waived/reduced community fees (9%), and veterans discounts, and special programs or employee discount options (all 8%).

The research analyzing concessions offered by the senior living industry is shared in a new  white paper.

Saxman said that at the end of last year and in the first quarter of this year, approximately 60% of polled owners and operators said they were not offering concessions. In the second quarter, however, operators began “slipping back into bad habits” due to desperation and an effort to build occupancy, with only 54% of operators reporting offering no concessions.

“The desperation is starting to hit us mid-year, which is disheartening,” she said, adding that Bild coaches and trains sales and marketing professionals to build value first. Value and relationships, she said, can’t be built off of discounting.

“We can’t break away from the mindset that you can build value by discounting and build occupancy by making concessions,” Saxman said. “That hurts you in the long run financially.”

Discounting and concessions deteriorate the tenure of resident stays, she said. Operators too often get hung up on the minority of prospects who cannot afford a community, Saxman added.

“The biggest thing you can do when someone is asking for a concession is to build value on what they want,” she said. “Everyone has a budget. Focus on their pain points and what someone needs. Show them you can deliver it better.”

Saxman said concessions would lead to cuts to staffing or other services in a community frames the story for the prospective resident that a community’s focus is on care, she added.

“There are going to be some individuals on budgetary constraints. You cannot get hung up on those individuals,” Saxman said. “They will figure it out and make it happen. People will sacrifice things if they really want it and see it as a premium.”

She added that she’s not seeing seasonal occupancy trends as high as it has been in previous years. She attributed the lags in occupancy to an increase in move-outs and posttraumatic stress disorder among sales team members still acting according to a pandemic-era mindset of what they can’t do, which perpetuates insecurities and excuses.

“I know it’s easy to offer a concession to get you where you need to get to. Ownership pressure, investment pressure is a real thing,” she said, adding that building value and rate integrity rather than going for the quick sale will pay off in the long run in the form of more occupancy stability.

The data

Based on data from more than 100 owners and operators collected between April 1 and June 30, Bild reported that of the communities that waived or reduced community fees, 30% offered 50% off the community fee, whereas other locations offered a reduction ranging from $600 to $4,000.

The average community fee in the first quarter was $2,403, whereas the second quarter saw those average fees increase to $2,670, a figure that was also higher than the second quarter 2022 average community fee of $2,551.

Rent reductions most commonly were for a duration of one to three months, although some communities offered reductions for an entire year. Rent reductions averaged $3,000, but some went as high as $6,000.

At the same time, however, operators are implementing rate increases. The most common increases are between 4% to 4.9%, although rate increases were seen in the range of 1% to 10%.

The South Atlantic region saw the highest rate increases, with approximately 37% of operators implementing increases of 7% or higher. About 20% of operators in the Mountain region reported similar rate hikes.

Operators in the East Central region were the least likely to implement rate increases, with almost 20% indicating no increases and approximately the same number reporting increases ranging from 3% to 4.9%.