Europe’s population is ageing, but the “housing-with-care” sector hasn’t caught up with the growing demand yet. How to harness this underserved segment of modern retirees with an active lifestyle? Hospitality Insights talked to Jan Garde, Founder & Chairman of THE EMBASSIES about reinventing senior living, understanding changing customer needs, future-proof business model and building a community.
You don’t seem to be your company’s target customer yet. Why Senior Living? What is the origin’s story of THE EMBASSIES?
As a young boy, when I saw my grandparents move into a retirement community, everything in that place shocked me: the smell, the layout, the sort of sadness in everyone's eyes, and the incredibly poor design. Everything was organised as a hospital, and people were really treated as patients. And to me, that felt utterly wrong. It stuck with me that as a society we came to the conclusion that this would be the best use of our resources and the best concept - places for people of a certain age to live together and wait for relatives and friends to pay a courtesy visit once a month.
About four years ago I started to investigate if it's still as terrible as I remembered it was 30 years ago, and it's actually still exactly the same. But today’s 80-year-old is nothing like 30 years ago. Our perception of life, how we treat each other, what we expect from life is vastly different so there is kind of a mismatch in place. And it's a very unsexy topic that people are not really engaging in. Everybody sort of understands that senior living makes a lot of sense but student housing sounds more fun and sexy, let's assume.
We didn't choose this journey as a commercial journey from iteration, we really had the desire to create something that we ourselves will look forward to using. So, in many ways, and shapes, we are designing something together with an incredible bunch of people to be kind of like a lighthouse, awaiting us at a certain point where we can't wait to be part of.
What have you learned about your target audience?
One key element is not to design for but with your audience. While developing THE EMBASSIES’ concept, we have held product clinics and visited more than 100 retirement communities to understand what the true consumer needs are.
The one thing that everybody hates globally about senior living is that there are only old people around. Also, the pattern that comes back - people in a retirement community don't feel old. They all see old people around themselves but they don't feel as old. It has something to do with the inner perception of the outer perception, a sort of human programming error that society passed on.
Our societies are ageing like crazy. The number of people over 65 will double in the next 10 years and the number of people over 80 will triple in that same timeframe. There's medical longevity research going on that's scary, to say the least, which is talking about lifespans of 120 becoming the new norm. If that happens, that will be really scary for our society. The German retirement system is based on the fact that people have eight years after retirement. That's how the financial model has been built, which will imply that if you stop working at the age of 65, from a logistical standpoint, by the age of 73 you should die.
Today life expectancy sits at 86. That's already a stretch. Pension funds need to cope with an additional metric. So, there is a challenge.
What is THE EMBASSIES’ business model and how is it different from other senior living companies?
It has nothing to do with senior living. In a way, it is a serviced-living offering in a place that looks beautiful, in the right part of town, in the right community, in the right neighbourhood close to everything that makes living beautiful.
Our model combines two interesting elements from a real-estate perspective: we sign extremely long leases (25-30+years) with a premium rent level, while our tenant structure has residential-like stability as our residents (ambassadors as we refer to them) stay with us for a long time. So it's a risk-free product in the hospitality disguise if you will.
This unique combination of high rent yields with long term stability is pushing us currently in conversations with landlords, investors and financial institutions. We hope to open our first property in 2022 - 2023.
THE EMBASSIES’ has embedded the membership model into the senior living concept. How does it work?
To me, it’s less a membership model and more a community model. Membership is normally a testament to a product or service sharing model. Members pay a weekly/monthly/annual fee to make use of a space or a service offering.
Our model is the „Ambassadors Club“. This is a very different proposition and the product here is a community and not a desk or a chair to sit/work/fitness on.
All of the above you are more than welcome doing and experiencing here but we focus on mental and physical wellbeing. We work with Stanford’s professor of psychology to develop a model positive about life change.
We don’t try to sell as many memberships as possible, grow crazy metrics. We are building a community. While the payment model behind and revenue streams are similar – the product is vastly different.
What is your company’s main area of focus in the next 12 months?
Selecting the right partners. Our real-estate proposition is pretty compelling so there is a lot of interest at the moment, which is great. However, we take our time evaluating the right partners because we are in this for the long haul and seek a structure that leverages and scales and is with the right people.
From a customer perspective, the last twelve months have given us all a pretty clear idea of what social isolation feels like so we have seen a huge influx of interest so we have our hands full finding more projects in more cities to build our network of embassies in the best cities.
Jan Garde will be speaking at the IHIF Adjacent Spaces event in Berlin on the 2nd of September in a session ‘Adjacent Living – Shaping The New Lifestyle’. Register now to join the international hospitality investment community.