Shea Properties is seeking a Revenue Manager to operate its Revenue Management Software (Yieldstar)

Candidates are required to have a Bachelors or Advanced Degree, with Regional Property Management, Asset Management, or Market Research experience preferred. The ideal candidate will have advanced technical skills, be detail oriented, analytical and methodical, with an outgoing, yet direct communication style. The position will report to the Sr. Vice President and work regularly with Community Managers, Regional Managers, and the V.P of Marketing to maximize Portfolio Revenue in sunny Southern Calif.

To learn more information and apply – link here:
http://tbe.taleo.net/NA1/ats/careers/requisition.jsp?org=SHEA&cws=1&rid=360

The AIM 2010 Conference theme – Many Marketing Channels: One Goal – reflects the needs of owner/managers and their service providers to master many channels to drive and validate their impact on net operating income. AIM 2010 will feature cutting-edge business education designed to help simplify using multiple marketing channels to achieve a targeted ROI occupancy. With more than 200 companies that own and operate apartments in attendance, it’s an event you can’t afford to miss!

We’ll be meeting at the beautiful Hyatt Regency Huntington Beach Resort and Spa in Huntington Beach, California. The location is fantastic and has to be seen to be believed. It’s right on the beach with lots to see and do in the immediate area. Best yet, it’s a family-friendly resort so bring the family and stay the weekend! There’s more information about the Hyatt and how to reserve your guest room at the special AIM Conference rate at www.aimconf.com. Be sure to make your reservations soon before our room block sells out.

There’s an exceptional line-up of presenters this year. Keynote conference speakers include Google’s Sam Sebastian, Director of Local and B2B Markets; Greg Sterling, Founding Principal of Sterling Market Intelligence; Danny Sullivan, Editor in Chief of Search Engine Land; Gary Angel, President of Semphonic; and Vivek Sodera, Co-Founder of RapLeaf. AIM 2010 also features intermediate and advanced sessions specifically developed with topics and speakers that address the challenges of using multiple marketing channels.

And we’re grateful to our sponsors who make it all happen. They include Apartment All-Stars, Apartment Finder, Apartment Guide, Benson Media, Capture the Market, First Advantage SafeRent, G5 Search Marketing, Grace Hill, Level One, Move, Multi-Housing New, Numeric Analytics, On-Site.com, Property Solutions International, RealPage, Realty DataTrust (Founding Sponsor), rentbits, Spherexx.com, The Rainmaker Group, and Yardi.

True to its reputation, the AIM Conference is going to be packed with educational value, growth opportunities and plenty of networking. We’ll see you there!

Register here for AIM 2010.

Click here to view AIM 2010 press release.

According to units, each week, Garver calls and incorporates community managers on pricing decisions by confirming the accuracy of the program data and adjusts any part of the program that property managers think are not competitive with others’ rates, or not appropriate for the current market place.

Dave Woodward, CEO of the Laramar Group, attributes their high occupancy rates (high 90s across the board!) to the use of both the LRO system and a pricing manager. “You can’t buy the software, flip a switch and assume it will work,” he says. “We’ve heard of companies that take this black-and-white approach, but it doesn’t allow on-site community staff to have ownership of the system. We’ve taken an approach to empower the field and let them have a say in the pricing.”

Garver echoes Woodward saying a successful implementation requires buy-in from property staff. “We didn’t want property managers left out of the process – they are experts who live in this every day,” she says.”

Read on about Garver and Laramar’s integration of the site staff in their expanding corporate initiative to stay on top in their markets at the following link: Priceless Input

“We believe it is most efficient to find local management with local expertise, and we don’t expect a single fee manager to understand every market either,” says Kyle Ellis, one of the managing partners of Abacus. “We’re perfectly comfortable working with several ‘best-in-class’ management firms across our portfolio.”

The first major issue is when multiple fee managers are used they all use different data and their own internal metrics and strategies.

The second problem with using multiple fee managers is inconsistent reporting. “When there are different types of reports coming in, on different schedules, it can be quite difficult to keep up with what’s really going on out there,” Ellis says.   “What you want is a single, consistent, and methodical approach to pricing and an accurate and timely reporting solution that’s used by all managers.”

Abacus adopted a standardized pricing strategy by deploying RealPage’s Yieldstar revenue managemnent system to help eliminate many of the inconsistencies they were experiencing.

Revenue management systems for multifamily generate pricing based on several factors, including current and expected vacancies, projected demand, recent rental rates, amenities, lease term, move-in date and existing market dynamics. Optimized pricing can be achieved daily, which in turn will help operators generate more income and improved financial results.

Read more about the Abacus case and other Yieldstar case studies on optimized pricing here:

Multiple Fee Managers, One Revenue Management Solution

Atlanta, GA (PRWEB) November 3, 2009 — Every company is addressing the current market challenges differently; some more aggressively and successfully than others. In late 2008, Lincoln Property Company decided to test a new price setting process to see if it could improve revenue. Lincoln’s executives designed a scientific test of the newest multifamily housing revenue management technology and used it at eight of their communities in separate markets. To ensure an objective evaluation, they paired test properties with similar communities in the same markets that continued to set prices with their customary process. The results proved a definite increase in lease rents at the automated properties – in spite of the economy.

“Seven of eight properties using automated rate setting had better results than our control group setting rates manually,” said Scott Wilder, senior VP, property management for the Lincoln Property Company residential division (shown at left). “Our perception entering the test was that we would activate the ‘black box’ and it would do the thinking. We were encouraged how engaged our team became; by using LRO and contributing to our weekly pricing calls, they became more focused on rate setting and the factors that drive revenue.”

Lincoln Property Company has a corporate culture of diligent pricing analysis and rate setting. “We are good at what we do but wanted to evaluate automated multifamily revenue management software tools and test the one we thought would be the best fit,” Wilder said. The company selected the LRO system, from The Rainmaker Group, which is widely used in the multifamily industry.

4.3% lift from LRO
Lincoln, which manages more than 350 conventional communities nationwide, began its six-month pilot in February 2009 with eight test communities using LRO to set rates, while staff at eight control properties continued their established price-setting process. To ensure test results were valid nationally, Lincoln selected communities in the Atlanta, Dallas, and South Florida markets. At the pilot’s conclusion, LRO properties showed a 4.3% lift over the eight control properties. The LRO system analyzed hundreds of historic and current economic, market, and comp-set variables, and traffic information to deliver updated rate recommendations daily.

“The surprise was the LRO recommendations caused our on-site and regional managers to engage more with their markets and the price-setting data and became more familiar with who their real competitors were and why they were gaining or losing leases,” said Wilder. “Our managers do a great job of rate setting, but the automated system is more detailed and looks at many more variables than you would think of including manually.”

Market-based pricing – minus emotion
Another surprise was how the pricing system responded to the soft market. “LRO’s analysis of market conditions, including guest traffic, revealed that significantly lowering rates was unlikely to produce a proportional increase in demand in the softening market,” said Wilder. “We took a measured approach and accepted the systems recommendation that we lower rates in small increments. This kept our LRO properties from deeply reducing rates unnecessarily.”

Looking forward to market recovery
“We ran our six-month pilot in a very soft market and the system helped us,” Wilder said. “LRO was good in the down market and when the economy corrects, the real value will come in the renewal cycle. Renewal rate setting is especially difficult where managers have relationships within their community. LRO’s renewal price setting removes the emotion from the decision. I expect higher revenue will be the result.”

“The transition to automated pricing is all about change management,” Wilder said. “Shifting communities to automated pricing changes the way we do business. LRO’s most solid benefit is that it helps our onsite people and regional managers do a better job. The longer you use it, the better you become at optimizing rents.” Lincoln expects to roll out the LRO revenue management system to its owned properties over the next two years and recommend revenue management to all their third party clients.

The November issue of UNITS magazine will feature an article profiling the Laramar Group and how it uses a pricing manager whose daily duties are entirely devoted to managing Laramar’s revenue-management software. By using a pricing manager to incorporate feedback between Laramar’s property managers into the revenue-management program, they are able to maximize the value of their revenue management system.

According to the article, Laramar’s pricing manager includes the community managers on pricing decisions on a weekly basis, confirming the accuracy of the program’s generated data. This overrides any aspects of the program that the property managers think are out of line with competitors’ rates or not appropriate for the current market place. When they decide to override the program based on observations of the property managers, the appropriate pricing adjustments can be made within 30 minutes.

For the entire article, check out the November issue of UNITS magazine arriving to National Apartment Association members and UNITS subscribers in mid-November.

Dr. Jian Wang

In a recently published white paper, “The Implementation of an Apartment Dynamic Pricing System,” Dr. Jian Wang, vice president of research and development for The Rainmaker Group, describes in great detail the implementation of an apartment dynamic pricing system with particular emphasis on setting optimal rental rates for new leases. The system he describes “has been helping several leading apartment operators offer prospective tenants a menu of rent options for the last six years. It sets the optimal rents everyday, which are presented in the form of unit type, move-in week and lease term.

Click here for entire white paper

Apartment operators struggle with a myriad of issues, one of the most important is setting rental rates for new and renewal leases. Traditionally, rents are typically set with the goal of achieving market share, maintaining occupancy and remaining profitable. Rents are determined by various factors including market condition, competition, condition of property, and vacancy rates. Management experience also plays a role in determining rental rates.

Revenue Management (RM) has emerged as another way to determine lease rates for apartment operators. This methodology uses data-driven pricing to find the optimal price for individual apartments based on current and forecasted market conditions.  Apartment Revenue Management Systems (RMS) is a rapidly growing trend for setting rental rates in the apartment industry. Once limited to the airline and hotel industries, RMS has seen significant growth in the apartment industry since multifamily-specific software hit the market several years ago.

The article includes a study of the characteristics of apartment rental firms compared to hotels from a revenue management perspective. The characteristics that apartments and hotels share:

• Both are perishable products (they are worthless until they are occupied again)
• Both have constrained supply (there’s only so much to go around)
• Both are effected by advance consumption decisions (customers reserve product before using)
• Both have censored demand observations due to product availability and/or pricing constraints

However, the apartment industry does distinguish itself with the following characteristics:

• Longer lengths of stay
• Fewer transactions
• No repeat customers
• More renewals
• Riskier decisions
• No group booking
• No walk-ins
• Concessions

Dr. Wang outlines his expert view on the design of an optimal multifamily revenue management system with modules including:

• Data Aggregator – links the property management systems and the RMS
• Statistics Operator – estimates a number of business statistics based on the aggregated historical data
• Demand Forecaster – predicts the remaining unconstrained demand for a finite planning horizon, which will be fed into the Rent Optimizer module
• Supply Forecaster – predicts the number of units available for lease for a finite horizon of future weeks
• Reference Rent Calculator – estimates reference rates
• Rent Optimizer – calculates optimized rents from which the optimal rental rates are derived in the Rent Recommender module
• Rent Recommender – module that recommends optimal rents by disaggregating optimized rents

Dr. Wang has more than 16 years of experience in mathematical modeling, system architecture, and implementation in engineering and software vendor industries. He’s a demonstrated leader in operations research and is published in several top journals.

Click here for entire white paper

Colonial Properties Trust has 119 multifamily properties with about 32,000 units.  The average rent across their portfolio is $803, and the properties average 15 years old. Colonial Properties Trust uses the MRI property management system and Rainmaker Group’s LRO revenue management system.

At the 2009 AIM Conference, Colonial’s Ray Thornton, Vice President of Information Technology (pictured below left) stated that the company’s revenue management program has increased their total yield (defined as revenue per occupied unit) versus control properties by about 500 basis points through the first quarter of 2009. Mr. Thornton’s presentation is embedded at the bottom of this post below.

Colonial’s Ray Thornton, Vice President of Information Technology (l)

In the second half of 2008, Colonial had to react swiftly after learning from its revenue management system about some declining fundamentals to lower prices, to boost occupancy and hence improve total yield relative to the overall market.  According to Axiometrics data for their markets, Colonial gained 3.4% in occupancy relative to their peers while sacrificing .5% of their rental rate, a net gain of 2.9% of total yield relative to the market.

Colonial piloted revenue management in two phases.  In its first phase pilot in April 2007, it recognized a 3.2% lift in revenue versus internal control properties.  In the second phase pilot, Colonial gained a 2.2% lift from October 2007 through January 2008.  The declining market of late 2008 gave Colonial a different kind of testing opportunity. They used this period to benchmark their pricing and occupancy versus their competitors and found some compelling data points:

• With third-party data from Axiometrics, Colonial was able to chart the trade-off that its revenue management system charged between rental rates and occupancy.  As its markets declined in the second half of 2008, the revenue management system reacted swiftly to cut rents to gain a disproportionate occupancy – which created a net income gain in yield relative to the market.

• Lowering prices boosted occupancy and improved total yield.  Overall, Colonial gained 3.4% in occupancy relative to their peers while sacrificing .5% of their rental rate, a net gain of 2.9% of total yield relative to the market.

• Revenue-managed properties outperformed peer properties as measured by revenue per unit in two pilot groups by about 5% through the first quarter of 2009.

Colonial Properties Trust’s actions throughout the last 12 months shows that its approach to revenue management performance can benefit companies that stay on course with its overall operations. Maybe your firm can benefit likewise.

Unequivocally, they told us no, they would not go back to managing revenue manually.  They cited overlapping benefits, with some interesting individual perspectives.

Watch the Interviews:

Are you interested in revenue management generally?  Do you have experience with it in the lodging, gaming, airline, or rental car industry -  or in a completely different sector?  We welcome story ideas, presentations, video and other media that may help to explain revenue management to an apartment industry audience.  Please send story ideas or media to stories [@] multifamilyrevenue.com (take out the brackets.)