An Interview with Mark Fogelman about Revenue Management
Leading operators shared their thoughts on rent maximization during a panel at the Multifamily Executive Conference this week. I had an opportunity to sit down with the panel’s moderator, Mark Fogelman, President, Fogelman Management Group.
Janine Steiner Jovanovic (JSJ): Your panel was titled “Out of the Fog: How to Adjust Operations in a New Rent Growth Paradigm.” What were the themes you wanted to address?
Mark Fogelman (MF): The panel was about the new rent growth phenomenon we’re experiencing post recession. We intended to cover six different topics, including marketing, training, and pricing, but the majority of the discussion and audience questions revolved around revenue management. It was clearly the hottest topic.
JSJ: You had a diverse group of operators represented. Did that help ensure a broad range of perspectives were shared?
MF: We had a great group of panelists, both public and private, small and large, with different types of properties in different markets. Julie Smith from Bozzuto, Erin Ditto from Bell Partners, Dan Ford from Freeman Webb, and Robert Grant from Equity Residential. All five of us are using revenue management. It’s amazing how rapidly these systems are being adopted today.
JSJ: What were people interested in discussing around the topic of revenue management?
MF: Nine out of the 11 questions asked by the audience revolved around revenue management. People were interested in understanding what the costs are. Revenue management is not inexpensive, but everyone recognized that the benefits quickly outweigh the costs if implemented successfully. The audience also wanted to learn more about training and implementation approaches, and options for ongoing systems management.
JSJ: Did the panel give any advice on what to expect from an organizational change perspective?
MF: We discussed the culture shift that takes place when you implement revenue management. You spend more time focused on pricing, but the benefits are significant. Instead of investing time in putting together reports and figuring out what price to use, you’re focused on the impact of pricing on your results and the drivers of those results, which include more than pricing.
JSJ: Tom Bumpass at Greystar calls this phenomenon a heightened revenue IQ. He explains that operators using YieldStar are more focused on the drivers that impact pricing, such as product readiness, marketing and organizational effectiveness, rather than focusing on coming up with the right price.
MF: Revenue management has clearly arrived. It’s no longer a pioneering concept. It’s only a matter of time before the majority of the industry is on board.