Revenue Management is a Hot Topic
Revenue management is a hot topic! I hosted a panel on multifamily technology at the National Apartment Summit in Washington, D.C., this week, where YieldStar became a clear theme. Many thanks to my esteemed panelists, including Bozzuto’s President Julie Smith, Gables’ COO Sue Ansel, Madison’s COO Dean Holmes, Greystar’s CIO Tom Bumpass, and Camden’s CIO Kristy Simonette – all YieldStar users.
J Turner Research shared some interesting stats at the summit about evolving resident demographics. Based on their extensive renter surveys, price is a close second to location in apartment selection criteria. If you break down the survey results into demographic categories – price is most important to the Millennial Generation and Generation X. Interestingly enough, price didn’t make the top three priorities for Baby Boomers, who prioritize a quiet place to live instead. Ever think of charging an amenity premium for “quiet” at your property? If you cater to Baby Boomers, you might want to consider it.
Many companies are finalizing their 2012 budgets and making plans to implement YieldStar. It’s no longer a question of if; it is a question of when and how. As the topic of revenue management came up at the conference, different YieldStar users enlightened the audience on their experiences.
Bobby Page from JPI explained that “sophisticated pricing models like YieldStar optimize revenue.” Page is equally focused on rent growth as he is on retention. He’s a passionate advocate for building a sense of community at his properties, to create the opportunity for greater loyalty, and more perceived value from existing renters.
Jerry Davis, SVP of Operations at UDR expounded on the value created through the discipline of looking at pricing every day with YieldStar. “People are either occupancy or rent driven,” Davis explained. “YieldStar is revenue focused. We need that balance.”
Davis went on to explain that he likes the way YieldStar also encourages a balance between the science of revenue management and the knowledge of people in the field. “Our managers review price every day and have a say in what price is ultimately used,” he stated.
After all, a revenue management system is not omniscient. Davis gave examples of unexpected military deployments, weather events, and other such factors, which require human input into pricing approach with revenue management.
Pinnacle CAO, Ed Wolff, continued the conversation, sharing that “skepticism can be a natural response from regional and property managers.” He described a Pinnacle-managed Tax Credit property that deployed YieldStar, whose manager was reluctant to use the system. Her property was exceeding budget significantly within 30 days, and the results only improved from there. “She’s become an evangelist for YieldStar within Pinnacle,” Wolff continued. “With more and more success stories like this, we have properties clamoring to get on board with the system.”
Revenue management is clearly a hot topic. Is it on your radar as you prepare your plans for 2012? Let me know your thoughts in the comments below.