Attendees of “RealWorld 2010,” the new moniker for multifamily software maker RealPage’s annual user conference, will learn how Price Optimizer works in at least three different sessions.

Topics range from “Revenue Management 101” to “Eliminating Concessions” and focusing on best practices to get the most out of revenue management technology.

YieldStar Price Optimizer, which helps set prices for approximately 700,000 units nationally according to this post from Keith Dunkin, vice president of business development and client services at YieldStar, is one of two major revenue management solutions used in the multifamily industry today, along with the Rainmaker Group’s LRO software package.

You can check out the complete run down of RealWorld 2010 revenue management sessions, to be held in Las Vegas July 25-27, here. (While a session on the business side of the senior living market was originally cast in the revenue management track, and highlighted in this column, RealPage has re-categorized it as a general session on its Web site.)

Speakers include a veritable who’s who of apartment pricing pros, including UDR’s Chris Long, Greystar Realty Partner’s Tom Bumpass, Archon Residential’s Mark Van Tilburg, Camden Property Trust’s James Flick, Berkshire Property’s Ken Catmull and Trammell Crow’s Susan Vickery.

With that kind of star power, RealPage says attendees will see how revenue management can help properties reach their potential, while achieving premiums of two to five percent over market performance.

That range is just slightly higher than the two to four percent spread typically cited for revenue management in the apartment industry. But it’s also not surprising that RealPage is one-upping the revenue management ceiling this year, given the momentum many owners and managers are starting to see as the recovery takes shape.

Colonial Properties Trust, for instance, an LRO user, recently said it intended to push rents 7 to 16 percent at selected properties using its revenue management tools.

After this MultifamilyRevenue article highlighted that trend, Keith Dunkin, RealPage’s director of business development and client services, commented that YieldStar users were also experiencing a lift in the current environment.

“Now that markets have begun to turn, we have seen aggressive rent increase recommendations becoming more prominent and are confident that the Revenue Management systems will help to lead the market back up,” Dunkin wrote on the LinkedIn Apartment Pricing Professionals group. “In the latest ‘down market’ YieldStar partners benchmarked their performance to non-YieldStar assets and 3rd party data providers and are seeing an average effective revenue premium of 3 percent plus, with some experiencing several points above.”

You can see Keith Dunkin’s full comments on the LinkedIn group, here.

Are you a YieldStar or LRO user? What results are you seeing in this environment? Let us know on the LinkedIn Apartment Pricing Professionals page.

“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

Rent price volatility is considered a negative by those seeking predictable price forecasts and budgets. We worry that frequent price changes may cause renters to push back or try to game the system.

On the flip side, revenue management maximizes total yield. Total return is more important than achieving the highest rent rate or price and budget stability. Additionally, anecdotal experience shows that consumers understand receiving different offers once the RM methodology is explained.

Below is a cogent, clear explanation of how Camden Property Trust expects its Yieldstar pricing system to work for Camden. In it, Camden President Keith Oden addresses the price volatility they expect, and why they consider it desirable.

Excerpt from Camden Property Trust Q3 2007 Earnings Call Transcript:

November 02, 2007

(Formatting added, and minor clarification edits have been made to clean up typos)

Keith Oden, President, Camden Property Trust

The Yieldstar system attempts to provide the best possible fit between underlying market conditions and the market-clearing price for our rental inventory at any point in time. In order to accomplish this, it is very much a forward-looking system, and at any time, any given time is attempting to anticipate market conditions five to six months out and make minor mid-course adjustments well in advance of forecast horizons, attempting to avoid price volatility in the future.

In a purely theoretical sense, the results we would expect to see from this tool applied to our communities are as follows:

• As markets begin to recover, and pricing power improves, the forward-looking nature of the pricing engine would raise rents sooner than our competitors.

• At some point out in the future, as evidenced of the market improvement as apparent, the competition will respond and raise rents as well. When market conditions begin to deteriorate, the reverse will happen. Our forward-looking model will begin moderating rent increases prior to our competitors.

Interestingly, the facts seem to support the theory. Beginning in the third quarter of 2005 Camden’s revenue growth was at the top of the sector and this continued through the first quarter of 2007. In fact from the first quarter of ‘05 through the second quarter of 2007, Camden’s cumulative revenue increase was second highest of all publicly reporting multi-family companies. So we achieved larger rental increases and we got them sooner than our competitors

Beginning in the third quarter of this year our revenue slowed relative to our peers, which is consistent with a revenue management tool that is attempting to get ahead of the curve of a slowing market. So, it will be interesting to see what happens in the next two quarters regarding the revenue growth rate of us, and our competitors.