Hyatt, Marriott See New Market: 'Senior Living'
LAST year, C. Y. and Eldred Murff sold their sprawling ranch home in the North Park suburb of Dallas and became ninth floor residents of a converted luxury condominium complete with an atrium lobby.The Murffs, both 73, extol the virtues of their new two-bedroom, two-bath home: housekeeping, room service, evening transportation to downtown theaters, and morning newspaper delivery at their front door. In place of a mortgage the Murffs pay a monthly rent of $2,560. The twist? Their landlord is the Hyatt Corporation. Hyatt, headquartered in Chicago, and rival hotel giant Marriott Corporation of Bethesda, Md., are turning down the beds of a new class of guests - senior citizens who want an active life style without the responsibilities of maintaining a home. The market is called senior living services, and spans the range from independent living to assisted care and nursing care. Though nascent, the market is expected to mushroom as baby boomers hit the age of 75 around the year 2020. For hotel companies that have made various efforts to diversify, senior residential services represent an effort to capitalize on hospitality know-how.
'Natural extension' "It's a natural extension of the hotel business," says Daryl Callahan, executive director of the Annapolis-based National Association for Senior Living Industries (NASLI), an umbrella organization of companies looking to serve the burgeoning multibillion-dollar senior marketplace. Bruce Mondschain of Hyatt agrees. "There's the basic concept of how people want to be treated. People like to be recognized and addressed by name. They also like to have things done for them in a timely fashion," says the operations vice president for Classic Residence by Hyatt, the senior living division. Furthermore, hotels have mastered food service, housekeeping, and transportation logistics - three of the services most valued by seniors. The fourth is health care, the hotel industry's weakest link, Mr. Callahan says. Hyatt addresses the situation by building near hospitals and offering personal care in adjoining wings at four of its six residential facilities. Also, as part of their monthly rent, residents pay for guaranteed nursing care at a qualified facility nearby. The Murffs' rent includes a buffet breakfast and dinner in the downstairs restaurant. There is a pool and exercise room off the lobby, a book club, and frequent transportation to a mall and supermarket. Says Mrs. Murff: "It's as close to independent living [as possible] without living alone."
Filling health-care gap Although Marriott had diversified into hospital food service, health care was unknown to the company. Marriott formulated a two-part approach. In 1988, it acquired Basic American Communities Inc., a nursing-home management company in Indianapolis that operated both assisted-living and nursing centers. "We bought all their management expertise," says Brian Swinton, product development and marketing vice president for Senior Living Services. And by melding health care with hospitality, the company came up with three basic designs: * Independent full-service communities that Marriott may either own or manage, such as The Fairfax in Fort Belvoir, Va., which it developed jointly with the Army Retirement Foundation-Potomac for retired military personnel and their spouses. * Full-service communities with varying levels of service (such as help with shopping or paying bills) and of care (such as assistance with bathing). * Catered-living communities that include licensed on-site health-care centers. Marriott's 13 senior living communities are "small but profitable," Mr. Swinton says. The publicly traded company hopes to roll out 150 communities in the future. In 1990, the division contributed 5 percent of the corporation's $7.6 million revenue. Beyond the year 2000, Swinton says the division hopes to generate a 10 percent or greater share. Hyatt, privately held by the Pritzker family, has six facilities it markets under the Classic Residence name. An annual income of $35,000 would support a one-bedroom unit with all the services. Like Marriott, Hyatt is planning to expand.