What Revenue Management is NOT

By Donald Davidoff

Note: The following are strictly the personal opinions of the author and do NOT represent any official opinion or position of Archstone or any other Archstone employees.

As revenue management is increasingly adopted by the industry, it’s interesting to see how various mythologies about what “revenue management is” have spread. Some are unintended, in that ideas form and get passed on from person to person without any real vetting and suddenly become “conventional wisdom.” Others have been carried out with intent, as vendors co-opt the term for marketing and sales purposes and multifamily housing operators co-opt the term to look like they’re doing something cutting edge. Both are actually avoiding the change necessary to implement a true revenue management system.

Here are three things revenue management is NOT:

Revenue Management is NOT just software and technology.

Instead, it’s a strategic program that happens to involve technology. Anyone viewing it as a technology project will be sorely disappointed. Revenue management is a way of thinking about the apartment business, and realizing that  a box is NOT a box is NOT a box. Rather, other important dimensions matter: when the box is rented, how long it is rented and whether it is renewed. Those aspects drive differences in value.

Revenue management fundamentally changes how you view your multifamily business. It will change not only how you price, but also how you budget, how you staff and what kind of reporting and business intelligence you need. And while it does affect your IT department and resources, that’s a necessary, albeit not sufficient, condition to succeed. Revenue management requires CEO or COO commitment – not  just involvement. A technology project, on the other hand, just needs money and a sponsor somewhere in the organization. Not sure of the difference between commitment and involvement? Just think about bacon and eggs: —while the chicken is involved, the pig is committed!

Revenue Management is NOT simply tracking and responding to your comps.

Knowledge of your comps’ pricing is important in setting rents, but it’s far from the most important piece of information for revenue management. Understanding your own value proposition, your own demand stream and your own supply behavior (e.g. what percentage of your leases will terminate early) are all more important, by a long shot. In fact, you can operate a good revenue management system with no comp data if you have to—we’ve done that at Archstone in places where it is very difficult to find reliable comps.

So while comp data can be useful — and a comp data tracking and response system is  better than nothing — it is NOT revenue management.

Revenue Management is NOT cheap.

It’s an alluring idea: maybe I can  get 70-80 percent of the benefit at a fraction of the cost. If you don’t really believe in RM, it sounds like an even better idea because, at least you’ll learn something along the way, right? Even if you ignore the fact that leaving 20-30 percent of your revenue lift on the table results in negative ROI, the simple fact is that the idea just isn’t true.

There is no such thing as a “poor man’s RM” because you can’t get most of the benefit with only simple tools. A good revenue management system involves sophisticated math that takes highly trained modelers (both RealPage and LRO have highly specialized staff for this very purpose) and programmers to develop the technology. That costs something. We all may want something for nothing, but it’s important to remember you get what you pay for. I know all multifamily companies need to be cost conscious, but I’m always surprised when an otherwise smart executive thinks  buying pricing software from a salesperson who emphasizes the low cost of their product is a good idea.

If you’re trying to maximize your own revenues, does it make sense to choose the option whose primary advantage is its low cost? A good system takes time, effort and money to develop. Just ask the two current software providers how many thousands of hours have gone into developing their systems. Execs in this industry, as in others, should be prepared to pay a fair price for them.

The author is Senior Vice President, Strategic Systems for Archstone.

With the spring lease up season upon us, MFR.com was lucky enough to huddle with Waterton Residential’s Barney Pullam. With 15,000 units in markets from Washington, D.C. to Southern California, and the core of his portfolio in Chicago, he’s got a balanced, diversified view on what’s happening with rents now, and how revenue management tools are gaming the recovery.

A 20-year vet in multifamily, he gave us the inside scoop on pushing rents as much as 20 percent, the incremental mind-shift that comes with implementing revenue management, and how to toe the line with renewing residents in today’s rising market.

MultifamilyRevenue.com: Waterton’s been using revenue management for the last two years, which I imagine was an interesting window of time to implement this technology. I understand you use the LRO solution from the Rainmaker Group. How has it performed in the current environment? What did you see on the way down, and what are you seeing now?

Barney Pullam, VP of Business Process, Waterton Residential: That’s right, we began implementing LRO in Q1 of 2009, and had it fully deployed by Q3.

As you can imagine, most of our markets at the time were caught up in the slow economy, and had higher exposures. What was interesting was that LRO started reducing rents in an effort to get those exposures down, but it did it in an incremental way, testing each level of lower rents as it went.

The result was that it started moving our rates more often, but by a lesser degree. Prior to LRO we would adjust effective rents by adding or reducing the amount of the concession. Concessions might increase from one month free to two months free as our vacancy increased. In actuality, that meant a swing in revenue of about 8.5 percent.

LRO, on the other hand, came in and adjusted rental rates just 2 or 2.5 percent during a given week, and then gauged any resulting change in occupancy before setting the next week’s prices. Basically, it took baby steps, which was interesting.

The other lesson learned we’ve learned from running revenue management is that it puts greater emphasis on the availability of a specific unit type. I really think that helps you to see the trend early, and react and capitalize on the changing market.

On the way back up, LRO did substantially the same thing: it made lots of little adjustments in the range of 2 to 3 percent per week. If those new rents were well received, then it pushed rents higher in an effort to maximize the overall income.

Regardless of the direction, we found the adjustments to be more frequent but at smaller increments than our prior approach. It tests the waters, figures out what the market is willing to accept and goes from there. It gives you a very systematic approach to pricing.

MFR.com: What are you seeing in terms of renewal rates using your revenue management tools today? Leases priced a year ago were presumably much lower.

Pullam: We implemented a more aggressive renewal pricing strategy in Q4 of 2010. Renewal rates have varied by market, of course, and we’ve seen a broad range. We’ve seen renewal offers of just 3 percent in our softer markets, but up to and over 17 percent in our stronger regions.

MFR.com: What’s the average renewal increase that your revenue management tools are recommending across your portfolio now? Are you following them? Are you going beyond them?

Pullam: For our most recent renewal offers on leases expiring in June, we are seeing average increases at 6 percent or better. In general, our communities have been following the renewal offers generated from LRO; any deviations from what the tool recommends have to be approved by the regional manager.

What’s interesting, though, is on new move-ins. In some instances, we have seen our communities push new rents even beyond what the tool recommends.

MFR.com: How is turnover tracking compared to past periods? Are residents “stickier” today? Why do you think we’re seeing this trend now?

Pullam: We have noticed turnover remaining relatively flat. Waterton has averaged a retention rate between 43 and 46 percent of our expiring leases.

I think residents are stickier, and are more accepting to renew at the higher rent levels today. We’ve even seen residents renew leases at rates 20 percent higher than what they had been paying. That’s pretty encouraging.

Of course, we’re also seeing some turnover as residents shop for a lower rate. But that’s fine, we can’t meet everyone’s price point.

I think there are a few reasons why residents are staying put. The first point is that they’re taking their time to shop and understand the going rate for apartments in their respective market. Also, I do think most people realize they received a better deal last year as a result of the economy and therefore are willing to accept a reasonable increase.

From there, it’s really just this economy we’re in. There’s been minimal job growth, and fewer opportunities for advancement at the jobs they have. In a growing economy, you would see people move in because of a new job. Today, they’re not moving out until that opportunity comes along.

MFR.com: You wrote a recent article for your company newsletter that was pretty interesting. You wrote, “We don’t want to be 98 percent occupied as those higher occupancies are reached by compressing rents; nor do we want to achieve a renewal conversion percentage greater than 60 percent.” Can you expand on that? How do you determine the right mix of renewals vs. new leases?

Pullam: It’s interesting. When you start using revenue management, you’ve got to break away from managing toward occupancy. Instead, it’s all about the overall availability of that specific unit type.

If you have a few one bedrooms sitting vacant for a little while, but your overall availability is under 7 percent for one bedrooms, there is no reason to lower the price. Instead, you’ve got to trust it, and let the tool do its job, which is to maximize rents.

If you do that and the apartments still don’t lease, LRO will adjust the pricing down. In some ways, it’s a hands-off exercise.

But in regards to the mix of renewals versus new leases, we don’t have a hard and fast rule. Our experience shows that when retention rates push north of 60 percent, we’re not being aggressive enough.

The challenge with renewals is that you’re putting those offers out 90 days before the lease expires, so you’re really selling a future rate, and that becomes even more challenging when you’re coming out of a slow season and going into a busy one. Sometimes, you need to take that leap of faith and push the higher renewal offer.

We like LRO because it give us the ability to set close to 200 parameters to maximize pricing. We pay a lot of attention to exposure, and leasing velocity and of course, we always have our eye on the competition. But one of our favorite features is looking at the aggressiveness parameter in LRO. It basically helps determines how aggressive LRO will be in pushing your rents, and can be a very useful tool.

MFR.com: We’ve been having an interesting discussion on the site and the LinkedIn Apartment Pricing Professionals group lately about factoring turn costs into your RevMan tools. Are you factoring in turn and marketing costs when you’re setting goals for pricing? How do you determine the point when a new lease starts paying for the cost of turning the unit?

Pullam: We do consider turn costs. LRO allows the user the ability to factor in turnover and marketing costs when establishing pricing for both move ins and renewals. We look at all costs associated with turning the apartment, including marketing, maintenance and vacancy, and input that value into to model.

MFR.com: What are the best practices you’re using to explain the market to residents now, while remaining firm on price?

Pullam: You know, one of our community managers was talking about this recently, and what she said was pretty straight forward, but it made sense to me. She’s really emphasizing the importance of taking the time to speak with the resident regarding the renewal increase. You really can’t just send a renewal letter. You’ve got to call and speak with the resident about the offer. It’s pretty fundamental, but it’s so true, too. Site teams need to sit down and talk with residents about what’s happening in the industry.

We’re reminding them that rents were lower when they moved in because the economy was pretty bad. Now that things are getting better, rents are increasing. We also encourage our residents to shop around to confirm that our prices are in line with the market.

MFR.com: What trends do you anticipate for the rest of 2011?

Pullam: We think the remainder of 2011 is going to show continued, solid growth in both new leases and renewal rates. We’re going to focus on continuing to push rents until we find the ceiling. Once we get there, we’ll focus on maintaining those higher levels.

MFR.com: Thank you for your time.

Pullam: You’re welcome, thanks for the opportunity.

Mid-career Americans who didn’t get in before – or have finally gotten out from underneath a toxic mortgage – now see owning a home as more of a nightmare than a dream. For them, renting may seem more desirable – or indeed, be the only option – just as banks continue to shy away from writing more mortgages.

Then, there’s the fact that restricted supply – nobody’s built during the recession, either — helped push rents into the black at the end of 2010 for the first time in two years; they’re now 7 percent higher than when the market bottomed in 3Q 2008, and MPF YieldStar is projecting them to gain another 5 percent in 2011.

For multifamily owners and operators, that perfect rainbow of circumstance equates to the beginning of a golden era in 2011.

At the same time, the industry has been adopting revenue management technologies at an increasingly swift pace. The Rainmaker Group, maker of LRO software, had a banner year in 2010, almost doubling its multifamily client count to approximately 65 companies, according to MFR.com’s internal analysis. And YieldStar chief Janine Steiner Jovanovic says 150 users now tap into RealPage’s price-setting solution. Between the two companies, that represents a combined 1.7 million units whose prices are set using RevMan software.  

A growing number of those new adopters have a different profile than what once was the norm in automated apartment pricing: they’re smaller to medium-sized operators operating in regional markets, not the nationally-focused mega-sized REITs who have been singing the praises of multifamily RevMan for years.

We had a chance to chat with the Rainmaker Group’s Bruce Barfield and Mike Beirne of the Kamson Group, a recent new adopter of RevMan, to get their take on where the apartment industry is on the adoption curve, and where it’s headed in 2011.

MultifamilyRevenue.com: It’s fair to say 2010 was a good year for revenue management in the apartment industry. What does that trend say about adoption of RevMan by the apartment industry in general? Why are we seeing this now?

Bruce Barfield, president, Rainmaker Group: I would attribute a portion of our recent growth to the unprecedented changes in the economy.  Business owners, myself included, have had to approach investment decisions with greater care than in the past several years. When faced with limited investment dollars, it is critical for business owners to have a clear picture of the return potential.  When faced with a decision to invest with the opportunity to grow revenue versus investing in new cabinets or fixtures, revenue management technologies continue to be the logical choice.

MultifamilyRevenue.com: How is revenue management changing the multifamily lease-rent price setting process? How is it changing how residents shop for apartments?

Bruce Barfield: As more and more companies adopt revenue management and as the footprint grows, the concept of frequently changing rents in response to market dynamics is becoming the norm.   The rent setting process is no longer a manual one where rents are determined at the beginning of the month and changed on an ad-hoc basis.  Making incremental changes in pricing is logical from both a revenue management and a sales perspective and allows one to differentiate true market response.

Over time, we’ve seen customers’ shopping processes evolve, as well.  Customers today are more sophisticated in their shopping methods researching in advance and narrowing down their selection criteria to speed up their decision making process.  With the transparency of pricing on line, the major Internet listing sites have real time pricing feeds incorporating lease term options. On site leasing associates are weaving that “prices can change on a daily basis” into their sales process.

MFR.com: Kamson Corp. is an owner and manager of about 15,000 units in New Jersey, Pennsylvania, New York and Connecticut that recently adopted LRO. What led you to adopt revenue management now? What are you expecting in 2011?

Mike Beirne, Kamson Corp.: We realized that traditional rental paradigms in our markets are changing, and consumer behavior is changing, too. The apartment industry is now paralleling other industries, such as airlines and hospitality; we’re starting to change the way we do business. The old ways of renting seem to be hitting a turning point.

MFR.com: For much of the past five years, large REITs were the main adopters of this technology in the apartment industry. At 15,000 units, you’re not small, but you’re also not running 50,000 apartments. What advantages do you see for smaller portfolios using this technology? At what point/unit count is it cost-prohibitive?

Mike Beirne: Well, I’m certainly not expert enough to say what’s cost prohibitive for others. But I do know if revenue management delivers on the returns we’ve seen with other adopters, in my opinion, there can’t be a point where it is ever cost prohibitive. It comes down to does the model work, and can its processes be learned?  From what we and our competitors are doing, I believe its becoming more the norm, not the exception.

MFR.com: How were you able to justify your investment across your portfolio? What type of analysis did you conduct to ensure you would get a return on your investment?

Mike Beirne: We are still evaluating that, but there’s just a gut check aspect to it. We’re already seeing that given proper guidance, our rental staffs are successful. It’s all about making those incremental gains. You only have to do the simple math to discern how the trend will play out.

MFR.com: How do you plan to support staff at the property level in terms of research and pricing info using this solution? What will they need to do to use and support the solution?

Mike Beirne: I think it’s a team effort. Our market data has to be timely, and we have to become proficient at the key indicators that LRO provides and be comfortable with them. We also have to support a cultural change with our leasing staff so they know how to “sell” based on the information LRO provides, as well as understanding the strategy you’ve built into your pricing decisions. Training is key.

MFR.com: What has impressed you most about using revenue management thus far? Where would you like to see more or better functionality?

Mike Beirne: The Rainmaker Group has been extremely timely and receptive to our questions. Everyone there is very well educated in the product they sell. That’s important to us, because at a company like Kamson, you need to have buy-in from the entire organization.

I terms of my wish list, I’d like to see a stand-alone, leasing agent boot camp for all things LRO aside from the support and training they already provide. As I said, I think training is the biggest key to success, and you have to learn any new technology to leverage it. The Stealth fighter is a great technology, but you’ve got to have highly-trained pilots to fly it. Why not do that for the apartment business, too?

Editor’s note: Don’t forget to mark your calendar for the inaugural Apartment Revenue Management Conference September 12-14, 2011 in Park City, Utah.  You’re gonna wanna be there.

Alliance Residential Company's Blerim Zeqiri

With a footprint of 45,000 units spread geographically from coast to coast, Alliance Residential Company runs what’s perhaps one of the most representative portfolios of properties in the multifamily business. So when the company announced recently that they were promoting Blerim Zeqiri from a position in their acquisitions department to Director of Revenue and Research for the company, we were all ears. We caught up with him to chat about running RevMan in one of the toughest markets around – Las Vegas – what to do today with renewals and strategically applying the technology in a portfolio that is both owned and third-party managed.

MultifamilyRevenue.com: Tell us about your background and your recent promotion to Director of Revenue and Research at Alliance. How did you become a revenue management professional in multifamily?

Blerim Zeqiri, director of revenue and research, Alliance Residential Company: I started working for Alliance about 5 years ago in acquisitions focusing primarily in underwriting, market research, and investment analysis. After about a year and a half in acquisitions I started working in the newly created asset management department where I have worked until now. As an asset manager I was involved mainly in Alliance owned assets focusing on equity contributions and distributions, forecasting and budgeting, longer term asset positioning and strategies, and the like. Considering my experience in acquisitions and asset management, Brad Cribbins (SVP and my boss while I was an Asset Manager) and Jim Krohn (our COO), thought I would be a good fit to create and run the revenue management and research department for Alliance, which I humbly accepted.

MFR.com:What revenue management solution do you use?

Blerim Zeqiri: We use LRO by Rainmaker.

MFR.com: How has your solution performed in the current environment? What did you see on the way down, and what are you seeing now?

Blerim Zeqiri: We started testing LRO at the end of Q2 last year on four test properties and paired each property with a control site for a more comprehensive comparison accounting for market influences.  Since then and with addition of more properties, we have seen revenue growth in the 1%-5% range.

That said, we did not have a revenue management system in place when the markets crashed and revenue decreased, but during our testing phase we did select a market that still continues to be a challenge –Las Vegas. With unemployment hovering around 15% and vacancies in double digits, we have been able to test LRO rather well in a challenging market and what we have seen so far is mostly rent preservation with slight increases when possible.

We have used LRO to help us maintain high occupancy rates which has allowed for some revenue increases even in a tough market. In other recovering markets such as Phoenix or Albuquerque, the revenue lift has been accelerated by LRO and it has ranged from 3.5%-5%.

MFR.com: As both an owner and third-party manager, your firm has a somewhat unique perspective when it comes to revenue management. What commonalities do you see in applying RevMan in those two portfolios? Is it easier to run RevMan in one than the other?

Blerim Zeqiri: I believe we are in a great position as an owner and third-party manager. As owners, we take an investor’s standpoint. This gives us a unique perspective as a third-party manager because we understand our investors’ goals and we can apply appropriate strategies that will advance their interests.

No doubt there are commonalities. As I mentioned earlier, geographically we are very diverse, so we own assets in different performing markets. In addition, we also have a wide variety of asset structures – some that are undergoing long term financing, or other ones we are positioning for disposition.

We can apply these same strategies on the revenue management side for our third-party deals depending on what the objective is. Chances are that whatever the property unique circumstances are on a third-party deal, we either have an asset that is somewhat in a similar situation, or we have previous experience from one of our own deals.

MFR.com: Have your third-party clients asked for revenue management as a service? If so, is this a differentiator – and additional source of revenue – for managers such as yourself?

Blerim Zeqiri: No, they have not, and we do not intend to convert the Revenue and Research department into an outsourcing tool for clients whose assets we do not manage. We started this department to advance our own long term investment strategies and we felt that it is only right we do the same for our third-party partners.

If we are managing an asset for a third-party client and they want to move it to LRO we will do so as a complimentary service. We have already committed resources to this department for our own assets so there is plenty of capacity to provide this service to our third-party clients. If in the future due to an expansion of services we need to commit even more resources, we might ask from our clients to share some of these costs, but even then it will be minimal and will not be profit driven.

MFR.com: How do you support property staff with research and pricing information?

Blerim Zeqiri: From a property staff level, we first go over macroeconomic research when I am setting global parameters for revenue on a specific property. Then we drill down to submarket and even property specific competitive advantages. Our strategy is to manage revenue as it is driven by research on macro and micro economic level. With a revenue management system in place it is easy to get lazy and apply the same parameters across the board, but we believe that at the core real estate is local and each investment has its unique characteristics that must be taken into account.

From a price perspective, I have weekly pricing calls with each one of our teams that is on LRO and it generally includes Business Managers, Regional Managers, and VPs. These calls help us review pricing, leasing and traffic, competitor trends and the wider submarket, and renewal efforts.

MFR.com: How has revenue management changed the way your company does business? How has it changed the multifamily industry as a whole?

Blerim Zeqiri: We are by no means veterans when it comes to revenue management systems, but we have strongly embraced the concept after the testing phase delivered promising results. We intend to approach revenue management with the idea of utilizing LRO for what it does best: forecasting exposure, supply and demand, amenity based pricing, detailed expiration management and the like.

At the same time we understand that revenue management systems are not omniscient and at the end of the day depend on people who are making decisions and influencing the system. Therefore, we are educating our staff to understand how the revenue management system operates so they see where pricing is going before LRO makes a decision. I emphasize often to our teams that our staff is indispensable and their role not only has not diminished with the rollout of LRO, but quite the opposite – it has allowed them to focus on the human element of our business such as training and mentoring of our staff, customer service, and marketing and sales. These are elements that math algorithms and high structured finance cannot substitute.

MFR.com: Does revenue management have the potential to change the focus of keeping “the heads in the beds” to maximizing the cash profit of a property on a square-foot basis instead? Has it done so already?

Blerim Zeqiri: I believe it does and to some extend it already has. Old habits die hard as the saying goes, so it will take some time for the concept of higher occupancy at any price to be reconsidered by everyone. But revenue management has played a role that has been paramount insofar as to help investors and operators see that the best equilibrium comes not when vacancy is 2%-3% or somewhere close to that, but rather when it intersects with the highest potential for revenue generation.

MFR.com: What are you seeing in terms of renewal rates today? Leases priced a year ago were presumably much lower. What’s the average renewal increase recommended by your revenue management tool in today’s market?

Blerim Zeqiri: As is to be expected, renewal growth rates have varied by market conditions. However almost across the board there have been increases – at least in markets we are in. This as well is to be expected considering we are leaving a period of unprecedented low rental rates.  In the Phoenix metro (North Scottsdale), for example we have seen renewal rates ranging from 1% to 15%, in part due to when that resident initially moved in. An average of around 6% rate is more standard though. We are seeing a similar case in Dallas.

We are following renewal recommendation closely since we agree with the concept of burning off concessions and recouping rents, especially when new move-in rents are strong and improving.

In instances where market conditions continue to improve, I have gone back and firmed up increases on renewals further than initial system recommendations. This has been possible when exposure is on the decline and rents are going up.

MFR.com: How is turnover tracking, compared to past periods? Are residents “stickier” today, and more apt to renew at a higher rate? If so, why do you think we’re seeing this trend now, even as wages remain relatively flat?

Blerim Zeqiri: Inevitably with an increase in renewal rates turnover has increased as well. This is something we anticipated and have budgeted for. Residents are getting accustomed to these increases as well and are smart enough to understand that after a steady period of decline in rents, increases are to follow.

We have had a case where a resident gave notice after a renewal increase only to come back a couple of weeks later (after shopping around) and lease a new apartment at a 3% premium to what the renewal increase was. He liked the property and would rather not move if savings were not substantial.

Overall though, as markets crashed in 2008, the industry was quick to react and lower rates in order to preserve occupancy. This was sometimes necessary particularly in markets with a high level of competition from the single-family shadow market. In this environment cost cutting was the only way forward. However, with debt service levels staying the same and many expenses being fixed (or small margin for cutback), these reductions were unsustainable in the long term. Most owners and operators have realized this.

MFR.com: If you get push back from residents on renewal increases, what are your options? What are the best practices you use to explain the market to residents, while remaining firm on the recommended price?

Blerim Zeqiri: During training when we rollout a new property on revenue management system or on weekly calls, I often reiterate to our teams that the best residents are the ones we already have. We truly would like not to lose any residents, but we also understand that this is impossible. Most of our residents understand this as well and they appreciate our staff for trying to find a solution for them to keep them happy and as residents even when it involves rental increases. We approach every renewal increase with an explanation on why it happened. We explain to our residents the shift in market trends which has resulted in rental increases across the market, but especially for new residents moving in. Knowing that we value our residents and give them the right of first refusal –for the lack of better term –over new residents has helped us retain many residents. We also explain the costs of moving, but we mostly try to understand what would the resident want to see improve in our community for the higher price they are willing pay to live there.

MFR.com: Beyond using it as a pricing tool, what other potential uses do you see for revenue management tools in the multifamily industry?

Blerim Zeqiri: In the immediate term, revenue management systems will offer a degree of consistency and fairness to residents – especially as they get to know this evolving trend in the industry.

In the long term however, I believe revenue management tools will help the multifamily industry foster an appreciation not only for a higher level of sophistication in pricing, but for the time it will free allowing operators to focus on client needs. The benefits of this focus will not be tangible immediately but will certainly become beneficial to the whole multifamily industry as the “stock “ of the industry continues to appreciate in the eyes of clients and investors.

MFR.com: Thank you.

Editor’s note: Don’t forget to mark your calendar for the inaugural Apartment Revenue Management Conference September 12-14, 2011 in Park City, Utah.  You’re gonna wanna be there.

Yet, like any running tally, we know this list isn’t complete. The fact that it’s perpetually out of date (and yes, sometimes more than a little) is testament to the growth of RevMan in multifamily. So once again, we’re asking our readers to contribute. Who’s not on this list that should be? Send me an email here.

• AIMCO (PROFIT by Pricing Revenue Optimization Systems)
• Alliance Residential (LRO by The Rainmaker Group)
• Allison-Shelton Real Estate Services (LRO by The Rainmaker Group)
• Altman Management Companies (LRO by The Rainmaker Group)
• AMLI Residential (RentCheque)
• Apogee Residential, LLC (LRO by The Rainmaker Group)
• Archon Group (Price Optimizer by M|PF YieldStar)
• Archstone (LRO by The Rainmaker Group)
• AvalonBay Communities (LRO by The Rainmaker Group)
• Babcock Brown Residential (LRO by The Rainmaker Group)
• Berkshire Property Advisors (Price Optimizer by M|PF YieldStar)
• Carmel Partners (LRO by The Rainmaker Group)
• Camden Property Trust (Price Optimizer by M|PF YieldStar)
• Centennial Holding Company, LLC (LRO by The Rainmaker Group)
• Colonial Properties Trust (LRO by The Rainmaker Group)
• ConAm Management Company (LRO by The Rainmaker Group)
• Continental Properties Company (LRO by The Rainmaker Group)
• CWS Apartment Homes (Price Optimizer by M|PF YieldStar)
• Dominion Management, LLC (LRO by The Rainmaker Group)
• E&S Ring Management Corporation (Price Optimizer by M|PF YieldStar)
• Essex Property Trust (Price Optimizer by M|PF YieldStar)
• Equity Residential (LRO by The Rainmaker Group)
• First Choice Management Group, Inc. (LRO by The Rainmaker Group)
• First Communities (LRO by The Rainmaker Group)
• General Investment & Development (LRO by The Rainmaker Group)
• Grand Peaks Property Management (Price Optimizer by M|PF YieldStar)
• Griffis/Blessing, Inc. (Price Optimizer by M|PF YieldStar)
• Hirschfeld Properties, LLC (LRO by The Rainmaker Group)
• Holland Residential (LRO by The Rainmaker Group)
• Home Properties (LRO by The Rainmaker Group)
• IMT Residential (LRO by The Rainmaker Group)
• JBG Residential (LRO by The Rainmaker Group)
• JPI (Price Optimizer by M|PF YieldStar)
• Julian LeCraw Company (LRO by The Rainmaker Group)
• Jupiter Communities (LRO by The Rainmaker Group)
• The Kamson Corporation (LRO by The Rainmaker Group)
• Korman Residential (LRO by The Rainmaker Group)
• Landmark Residential (LRO by The Rainmaker Group)
• Laramar Group (LRO by The Rainmaker Group)
• Lincoln Properties (LRO by The Rainmaker Group)
• MC Companies (LRO by The Rainmaker Group)
• MEB Management Services (LRO by The Rainmaker Group)
• Mid-America Apartment Communities (LRO by The Rainmaker Group)
• Mission Residential (Price Optimizer by M|PF YieldStar)
• Morgan Group (Price Optimizer by M|PF YieldStar)
• Morgan Properties (LRO by The Rainmaker Group)
• NOI Capital Partners (LRO by The Rainmaker Group)
• Northland Investment Corporation (LRO by The Rainmaker Group)
• Pinnacle (Price Optimizer by M|PF YieldStar)
• Prometheus Real Estate Group, Inc. (Price Optimizer by M|PF YieldStar)
• Post Properties (LRO by The Rainmaker Group)
• PRG Real Estate Management (LRO by The Rainmaker Group)
• Regional Investment & Management (RIM) (LRO by The Rainmaker Group)
• Resource Residential (LRO by The Rainmaker Group)
• Sagebrush Capital Management (LRO by The Rainmaker Group)
• Sares-Regis (Price Optimizer by M|PF YieldStar)
• Shea Properties (Price Optimizer by M|PF YieldStar)
• Simpson Property Group (LRO by The Rainmaker Group)
• Steven D. Bell & Company (Price Optimizer by M|PF YieldStar)
• Switzenbaum & Associates (LRO by The Rainmaker Group)
• UDR, Inc. (Price Optimizer by M|PF YieldStar)
• Walton Communities (LRO by The Rainmaker Group)
• Waterton Residential (LRO by The Rainmaker Group)
• Weinstein Properties (LRO by The Rainmaker Group)
• Wilkinson Real Estate Advisors, Inc. (LRO by The Rainmaker Group)

Notice someone who’s not here who should be? Email me.

And remember, mark your calendar for the inaugural Apartment Revenue Management Conference September 12-14, 2011 in Park City, Utah.  You’re gonna wanna be there.

Apartment Revenue Management Conference

* Professional multifamily investors, asset managers and general partners;
* Pricing managers and analysts;
* Property management executives; and
* Quantitative marketing managers

* Learn revenue management strategies to maximize financial yield

* Attract new investors with superior operational and pricing capabilities the way the REITs do

* Brainstorm tactics with pricing professionals from other industries

* Skeptical? Fact-find with experts about whether rent optimization works in multifamily

* Find a competitive edge as a third-party manager with new pricing tactics and metrics

* Find vendors of systems, implementation consulting and data

* For brokers and lenders too – learn what revenue management means for underwriting transactions at maximum value

…and more!

Registration will open in the first quarter of 2011. A formal call for presentations will be issued at that time. However, we encourage the informal submission of ideas, topics and speakers right now and at any time. Please contact us with your thoughts.

Media inquiries: Don Canfield, LinnellTaylor Marketing, 303-682-3942 or don [at] linnelltaylor.com

Conference program: Steve Lefkovits, MultifamilyRevenue.com (510) 444-2988 or steve [at] jtimedia.com

NAA: Paul Bergeron, National Apartment Association, (703) 797-0606 or paul [at] naahq.org.

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.