2018 Predictions in Relation to the Demand Management Platform

I hope everyone had a great holiday season and is enjoying a happy new year. In that spirit of renewal and rebirth, I thought I would use this newsletter to lay out a few predictions for 2018, particularly as they relate to the demand management platform.

Artificial Intelligence (AI) will find applications this year. It will take years for AI’s full impact to be realized, and very little (if any) real AI applications were used in 2017; but I think AI will start to find real use in the coming year. There’s already one commercially available chatbot app, and I know at least one of the big platform providers has substantial activity going on in the space. At D2 Demand, we are specifically investigating applications for use in call coaching and pricing. I doubt the latter will have an impact in 2018, but I would be surprised if there aren’t implementations of the former in place before the next ski season.

National rent growth (YOY) will stay in the 2-2.5% range. 2017 saw unusual stability in the YOY national rent growth numbers. While substantially down from the historical levels of 2014-mid 2016, there was almost historic stability in the monthly numbers. YOY rent growth never varied from a 2.1-2.5% range, and I see little reason for that to change. Macroeconomic and rent growth are strong, core inflation seems stable and supply growth seems likely to keep a cap on any upside opportunities. I’m looking forward to the upcoming NMHC Annual Meeting to get a sense of what senior executives feel, but we seem to be in a “goldilocks zone” (not too hot and not too cold) that is likely to continue for the foreseeable future.

Understanding of marketing spend (and cost per lease) will, at best, have incremental improvements. Interest and investment in analytics platforms continues to improve. However, a) most companies continue to approach the problem in sub-optimal ways, and b) it is notoriously hard to get lead-to-lease attribution modeling correct. The latter is particularly challenging given the way prospects bounce back and forth between online and offline activity; and for all the investments in digital marketing, the vast majority of activity is still offline (phone calls, visits, etc.). There are tools that can help with this, but I find the cost, complexity and energy required to implement will limit interest in investing in this for all but the largest operating platforms.

Multi-family housing operators will continue to miss out on the opportunity to leverage email re-marketing. As we reported in early summer, our 2017 research on this topic showed lower levels of adoption than in 2014; and I see nothing in industry trends to suggest this will suddenly improve in 2018. I bring this up in hopes that talking about this prediction will actually make it less likely to come true. Of all the things I’ve seen in the industry, this is the one that most confounds me. It’s really not that hard to do, and it doesn’t cost much. I understand that it’s not as sexy as social media and other “shinier bangles,” but it works. We all see it in the emails we get from retailers, hoteliers, cruise lines, etc., so it continues to trouble me that most in our industry don’t bother to use it. You spend so many dollars to get leads, why not spend a few pennies to continue to engage them?

Operators will talk more about Customer Experience (CustX) but still not do much about it. We all get that CustX matters but it’s really hard to draw the direct line from a CustX investment to financial ROI. Not that there isn’t a return…it’s just hard to be as sure compared to so many other investments. So with the tailwind of good market conditions, and many other projects fighting for resources, CustX continues to suffer from a “more talk than walk” reality.

One area of CustX that will get investment is package delivery. Amazon entering the space will alone drive improvement, directly from their product and indirectly from others upping their game in response. With several models out there now, operators can tailor solutions to the specific needs of their individual buildings…lockers in some, full rooms in others and maybe even some following Camden’s model of not handling packages. Add in a growth in smart locks paired with cameras to allow in-home delivery, and we will see a lot of investment and effort to “slay this dragon.”

Single family rentals (SFR) will continue to lead the way in smart home technology and self-showing. SFR is still a nascent industry. It hasn’t even been through a full business cycle. Having done some work in the space, one thing that strikes me is how the necessity of handling a very geographically disperse set of units has been the mother of invention for both self-showing and other smart home technology. In fact, without this kind of technology, it’s unlikely that SFR could have developed as a legitimate “at scale” operation. Multi-family operators would be wise to see how SFR operators are implementing technology and maybe even test out self-showing themselves.

RealPage will buy something. Ok, this is just here to guarantee that I can’t for “0-fer” on all my predictions! 😊

If any of these discussions are of particular interest to you, please don’t hesitate to reach out. We’d love to help you make any of these predictions come true for you!