IBISWorld estimates the crisis and care accommodation sector will grow at an average annual rate of 2.8% over the five year period to 2009-10. Growth in industry revenue is mainly attributed to an increase in demand for residential care services, government policy placing less emphasis on long-term facility-based residential care and on public housing provision.
A high incidence of family breakdown is also a driver of demand for the industry's services - particularly in juvenile centres and crisis accommodation.
Other trends that become prevalent during a downturn that simultaneously increase demand for housing include a high incidence of single parenthood, lower levels of public housing provision and increases in drug dependence and gambling addiction.
Over the period, the number of people with disabilities is growing at a faster rate than the overall population, due partly to the ageing of the population. This, along with an ageing of carers, has affected an increase in demand for accommodation services for disabled people. Due to a jump in the number of small, not-for-profit groups starting operations, coupled with an increase in volunteerism, which often goes unreported, and may skew employment forecasts downward, only a slight increase in establishments and employment is expected in this industry.
IBISWorld forecasts that this industry will grow at an average annual rate of 3.6% over the five year period to 2014-15. Over the outlook period, industry revenue will primarily depend upon the level of government funding, the level of economic activity, level of unemployment and the continued support from public and government awareness of the benefits of industry services.
As most people who use this industry's services are financially disadvantaged, industry growth is significantly affected by the availability to users of free or low cost services. To maintain a strong rate of growth in services, welfare organisations will need to focus resources on growing government funding, donations and voluntary labour.
In relation to out-of-home care for children, governments will continue with policies that emphasise foster care and family reunification, with less emphasis placed on facilities-based care. Out-of-home care is seen in many cases as a temporary alternative to assist families in crisis. While there will be further reductions in long-term facility-based care for children, this policy may also result in an increased demand for temporary accommodation support.
IBISWorld expects a continuing trend of governments moving away from direct service provision, and toward funding non-government organisations, which tend to be more efficient. The increase in private operators will most likely lead to a drop in the standards and qualifications of staff. This will result in lower wage costs and higher profits towards the end of this period.
Key success factors for operators in the industry:
- Access to volunteer labour. Good access to volunteer labour who are reliable.
- Ability to raise revenue from additional sources. Have strong fund raising skills.
- Superior financial management and debt management. Keeping capital and operating costs to a minimum while still providing the required level of service.
- Production of goods currently favoured by the market. Meeting the residential care needs of disadvantaged people, and minimising the level of unmet demand.
- Ability to allocate product/service to areas of greatest need. Meeting the residential care needs of disadvantaged people and minimising the level of unmet demand. Services should be provided to those people that are in most need.
- Ability to take advantage of government subsidies and other grants. The ability to obtain all available government subsidies is important.
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Robert Bryant is the general manager of business information firm IBISWorld.
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written by Wartol, September 30, 2011
