Holiday Retirement Corp.

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Holiday Retirement Corp.

1963–83: BUILDING A CHAIN OF INDEPENDENT LIVING FACILITIES

2000–06: A PERIOD OF RAPID BUILDING

1963–83: BUILDING A CHAIN OF INDEPENDENT LIVING FACILITIES

In 1963, William (Bill) Colson and his father, Hugh, started a construction company called Colson & Colson. Hugh Colson had been a carpenter, and the Colson family had been poor throughout Bill’s childhood and young adult years. In fact, Bill, who had the reputation of being a humble and private man, had worked as a dishwasher to pay for his schooling and “barely made it through two years at Bakersfield Junior College” in California, according to a 2004 Oregonian article.

In 1970, the Colsons entered into a joint venture with Carl Campbell of Wenatchee, Washington, to build one of the first senior housing facilities in San Diego, California. At the time, retirement communities represented a fledgling industry with unsure prospects, and Bill Colson “wasn’t convinced” of the wisdom of the venture. “It wasn’t a nursing home, and it wasn’t an apartment.… I didn’t know what to think,” he told Oregonian in 2004. The trio formed Holiday Management in 1971.

Throughout the 1970s and 1980s, Holiday Management grew slowly but steadily. Then during the mid-1980s, with financing readily available, there was a surge in senior housing projects in the United States. The time was ripe; with 32 million people approaching age 65 and older during the early 1990s, the need for senior living communities was on the rise. However, lack of experience and undercapitalization led to failure for many new housing businesses. Many of these projects were too expensive, too large, built in isolated locations, or lacked needed healthcare services. In addition, the over-60 population was not yet sold on the concept of senior housing, and rooms stood empty.

Beginning in 1983, Holiday Management, which included Colson & Colson Construction, developed and constructed retirement facilities through partnerships or limited liability corporations. The Colsons formed Holiday Retirement Corp. in 1987 and hired Daniel Baty, former chief executive of Hillhaven, the nation’s second largest nursing home chain, to become their chief executive officer.

EXPANSION INTO CANADA AND EUROPE

When Baty took charge of Holiday, the company consisted of 40 independent living facilities. By the early 1990s, after expanding into Canada, Holiday had 130 facilities with 13,000 units in North America. In 1994, the company added close to 3,000 units spread across 18 properties to bring this number to about 150. There were more than 17,000 units by 1995. Holiday also then managed 16,000 units in about 130 properties. By that time, it topped both the owner and manager lists for senior housing and was by far the nation’s largest owner of senior housing. It continued to top the lists in 1995 and 1996.

The key ingredients of Holiday’s success were its focus on simple systems, common purchasing, dietary planning, and consistent operating policies and procedures with divisional and regional management of facilities. Suites in a typical Holiday facility did not have kitchens because Holiday served three meals a day in a group dining room. Homes also provided housekeeping and linen services and transportation in a luxury minivan.

Holiday did not use radio or television ads to appeal to its target market, the 65-plus demographic group, because people in the senior generation did not watch a lot of television. Rather, its direct marketing efforts consisted of personalized two- or three-page letters. Holiday also kept in mind that it was marketing to two groups of people, the prospective residents and their children, the “influencers.” While the influencers were more concerned with issues of safety and meals, the top priority for the actual potential residents was the availability of formal and informal social activities.

Holiday branched out into Europe in 1995 when it entered into a joint venture to acquire Peverel, the United Kingdom’s largest retirement home manager. Peverel managed more than 21,000 retirement homes in about 500 developments in the United Kingdom. The company continued to grow, both in size and revenue, and in 1996, Holiday did nearly $600 million in revenue. It opened a home in Clevedon, North Somerset, England, in 1996.

By 1997, Holiday Retirement Corp. operated 177 retirement complexes with more than 21,500 units. That year was a period of dynamic growth for the senior housing industry. Colson was able to say in the October 1997 National Real Estate Investor that “[Holiday’s] typical project is … 110 to 120 units. When we open it, we’re preleased about 48 percent, and we’ll hope to be stabilized in eight to 12 months.”

However, 1998 and 1999 were merely modest years for domestic senior housing, with the largest organizations expanding their capacity only slightly because of the constrained availability of capital. Holiday, however, continued its international expansion and added 23 domestic properties. In 1998, it purchased most of Medotels from French Accor SA. In 1999, it added the Seriance Group in France, which became the fifth largest assisted living management operation in that country. It also opened its second establishment in the United Kingdom, called The Hawthorns, which offered three-course meals for lunch.

It also stepped up its growth in Canada, whose senior housing industry, according to some sources, was about 15 years behind that of the United States. “The other competitors [in senior housing] are starting to move,” said Colson in a 1998 Ottawa Citizen, “and [we] want to be on the leading edge.” By 1999, there were more than 225 retirement facilities with 27,000 units in 39 states, Canada, and the United Kingdom. Also in the late 1990s, Holiday overhauled its information technology infrastructure.

COMPANY PERSPECTIVES

Our belief, and the one that Holiday Retirement is based on, is to treat people the way we would like to be treated ourselves. With this attitude, Holiday’s managers and employees can provide a stable and caring environment that allows seniors to enjoy retirement to the fullest.

2000–06: A PERIOD OF RAPID BUILDING

In 2000, Holiday began XL Management to take over its assisted living facilities. Until that time, the company had had assisted living wings in only a few properties, but from 2000 to 2004, XL Management grew slowly to reach a total of 16 facilities. According to Colson in a 2004 Multifamily Executive article, slow growth was necessary because “[w]hen you are dealing with seniors and health issues, you don’t want to go too fast.”

By 2001, there were about 2,100 continuing care communities throughout the United States, serving roughly 600,000 people, according to the American Senior Housing Association. The population in these communities exceeded the 500,000 seniors living in assisted living projects, which had blossomed as an alternative to more expensive nursing homes in the 1990s. Colson opened 27 new properties. “We opened a new building every 13 or 14 days,” Colson recalled in Multifamily Executive in 2004. “That’s hard for the management company. It’s hard to hire new people and fire up a building that often.”

By 2003, Holiday had a total of about 30,000 units in more than 250 retirement communities in the United States, Canada, and the United Kingdom. It sold Seriance in 2003, and, in 2004, it ranked seventh among the top 150 private Oregon-based corporations as ranked by Oregon Business magazine. It was the largest domestic owner of senior housing for the 11th consecutive year with close to 35,000 units in almost 300 properties and the second largest property manager.

In 2005, the company slowed its building pace. It raised average rents 3 percent. The company that liked having a “small frog in every pond,” according to Colson in the 2004 Multifamily Executive article, continued to shy away from large metropolitan areas and to serve predominantly a middle-class clientele. “We aren’t after the rich and we aren’t after the poor. We are after the middle American … the person who has worked their whole life and has a little bit in savings and a little bit in social security,” Colson announced.

As Colson looked to the future, he saw the possibility of stepping up the pace of building again by the year 2010. “We may just have to kick the management company in the pants and do 30 to 40 new buildings per year” to keep up with the growth of the over-60 population. Fortress Investment Corp., a real estate investment and finance company located in New York City, purchased the company in late 2006. However, day-to-day management of the company remained with Holiday.

Carrie Rothburd

PRINCIPAL COMPETITORS

Health Care Property Investors, Inc.; Life Care Centers of America; Nationwide Health Properties, Inc.; ACTS Retirement - Life Communities, Inc.; Emeritus Corporation; Atria Senior Living Group, Inc.; Health Care REIT, Inc.; Kindred Healthcare, Inc.; LTC Properties, Inc.; McCarthy & Stone plc; National Health Investors, Inc.; Senior Housing Properties Trust; Ventas, Inc.

KEY DATES

1963:: Bill Colson and his father start a construction company called Colson & Colson.
1971:: Colson founds Holiday Management Company with two other shareholders.
1987:: Holiday Retirement Corp. is formed.
1995:: Holiday enters into a joint venture to acquire Peverel in the United Kingdom.
1998:: Holiday purchases most of Medotels from French Accor SA.
1999:: The company establishes the Seriance Group in France.
2000:: The company starts XL Management.