The Demand Solutions Blog

7 Ways to Tell if Your Revenue Manager is Skinny Dipping

Posted by Donald Davidoff on Jul 24, 2019 8:36:00 AM

One of the challenges with pricing and revenue management (PRM) being more than 18 years old is that most of the pioneers in designing and developing the software are no longer involved. In some cases, companies are on their 3rd or even 4th generation of associate (this holds for both software vendors’ and operators’ teams).

The result is that we often no longer have a healthy skepticism that drives deep knowledge of both the software’s capability and the ways various parts of the demand management ecosystem (all the policies, procedures and other activities that affect demand) affect how we should use the software.

After a decade of growth in the multifamily sector - when it's been relatively easy to deliver upside - senior operators might ask how much of their growth comes from proficiency in PRM, and how much from riding the market.  As Warren Buffett famously said, “Only when the tide goes out do you discover who's been swimming naked.”

Read More

Topics: Pricing, Revenue Management, Demand Management

3 Reasons Multifamily Pricing Needs an Ownership Mentality

Posted by Donald Davidoff on Jul 16, 2019 1:30:33 PM

It’s been more than 18 years since the first property went live on the first automated pricing and revenue management (PRM) system in multifamily housing. What started as a niche product and function (only about a half dozen companies were using PRM software in early 2006 (six years into the “PRM revolution”) is now embraced by owner/operators and fee managers alike. Virtually all of the NMHC top 50 use automated solutions, and we estimate close to 50% of all professionally managed multifamily housing companies use a revenue management system.

In my time watching PRM mature from an early start-up stage to widespread acceptance, I’ve seen many models of PRM support evolve. Broadly, I put them into two camps: those whose pricing managers behave as if they own the communities and those who serve in a more subordinate role to owners or operators.

In the case of the former, PRM and property management are co-equals and collaborate as such in executing a strategy. Of course, being co-equal has its challenges, the most obvious of which is coming to a decision when both parties authentically disagree; if they’re co-equal, then who casts the metaphorical deciding vote?

Read More

Topics: Pricing, property management, pricing and revenue management

9 Take-Aways from NAA Apartmentalize 2019

Posted by Donald Davidoff on Jul 10, 2019 2:54:43 PM

A little over a week ago, 10,000+ apartment industry colleagues descended upon our hometown of Denver, Colorado for NAA’s annual Apartmentalize conference. Along with entertaining keynote speakers and many different dinners and parties, there was an excellent program of education, networking and one-on-one meetings. Here are a few highlights from what we saw and heard:

1. Despite political uncertainty (and even a few economic concerns), the industry is still very much a confident group of people. With annual rent growth still above the long-term trend, we continue to enjoy the longest bull run in the modern rental housing industry’s history. Perhaps the best implication of this is that the run is now so long, we no longer hear baseball references around “what inning” we are in 😊

Read More

Topics: pricing and revenue management, Multifamily Trends, Technology, Short-Term Rentals

Are We Looking at Property Differentiation the Wrong Way?

Posted by Trachelle Spencer on Jul 2, 2019 9:00:00 AM

I recently read - with interest - the coverage of NMHC's recent spring Board of Directors meeting in Chicago. What really caught my eye was a talk entitled "Seven Ways to Succeed in the Future of Real Estate," given by Dror Poleg, the founder of Rethinking.RE. The presentation discussed how technology is redefining real estate, shifting value from the physical space to the services provided.

In this environment, the logic goes, the customer, rather than the property, increasingly becomes the asset of your business. Space becomes a service and competitors become your partners. From this radical view of an increasingly inverted world, the idea of the customer becoming the asset resonated with me, based on my own experience in the multifamily industry.

Read More

Topics: property management, apartments, apartment operations, multi-family housing

Multifamily Pricing: The Danger of “Doing Fine”

Posted by Dom Beveridge on Jun 25, 2019 3:57:01 PM

A couple of weeks ago, we published a post about the risk to multifamily operators of complacency in their approach to pricing and revenue management (PRM).  Frequent readers of this blog will be familiar with this theme, which was a major finding of our 20 for '20 white paper.  To summarize, PRM seems to have slipped from the senior management agenda, resulting in a pervasive view that "PRM is doing fine."

PRM has been doing fine in multifamily for a number of years - in fact, it's been doing exceptionally well, delivering outsized returns for operators and investors alike.  Looking forward, however, our concern is not so much with the current business practice, but its future evolution. With reduced senior management attention and technical innovation delegated to a highly consolidated vendor community, several of the drivers for big change appear to be missing.  To put it another way, the source of the next big thing in PRM is far from clear.

Read More

Topics: Pricing, Revenue Management, pricing and revenue management

NAA Apartmentalize:  3 Killer Pricing and Marketing Tactics

Posted by Trachelle Spencer on Jun 18, 2019 12:02:00 PM

It's June, the sun is out (mostly) here in Denver, and like all locals involved in the multifamily industry, I'm looking forward to welcoming a few thousand esteemed colleagues to my hometown for next week's NAA Apartmentalize conference.

This year I'm excited not only because the show is in Colorado, but because I'm taking part in what promises to be an excellent panel, discussing one of my favorite topics: the interplay of pricing, lead generation and sales.  I will be joined for this discussion (which takes place at 5 pm on Thursday, June 27) by my friends John Reardon of Beacon Communities and David Dear of Equity Residential.

Read More

Topics: Pricing, NAA Conference

NAA Apartmentalize - A Long View on Short Term Rentals

Posted by Donald Davidoff on Jun 11, 2019 2:41:36 PM

In just a couple of weeks, I’ll be joined by industry veterans Melanie French, Steve Hallsey and Marcie Williams as I moderate a panel, “A Long View on Short-term Rentals” at NAA’s Apartmentalize conference.  I’m excited to further the conversation about a subject that is top-of-mind in our industry.

I still remember four or five years ago when Jaja Jackson from AirBnB first presented to an NMHC conference. To say the reception was a bit cold would be like saying the Pope is a bit Catholic. The Q&A session was one of the most aggressive I’ve ever seen; and when I spoke up to opine that I viewed short-term rentals (STRs) as just another demand stream to be understood and leveraged, I could feel the metaphorical daggers hurled my way by the vast majority of the audience.

Read More

Topics: property management, NAA Conference, Short-Term Rentals

3 Steps to Avoiding Pricing Complacency

Posted by Donald Davidoff on May 29, 2019 1:13:12 PM

The legendary golfer, Jack Nicklaus is often quoted as saying, "Complacency is a continuous struggle that we all have to fight." We have frequently argued on this blog and elsewhere that the decade of growth has blunted many of the tools that have delivered success and shareholder value in our industry over the last couple of decades. Rising tides lift all boats, and when growth is all-but-guaranteed, competitive capabilities atrophy.

Read More

Topics: pricing and revenue management, Multifamily Trends, Technology

The Research Is In On Multifamily Lead Conversions

Posted by Donald Davidoff on May 21, 2019 10:39:47 AM

If - like me - you're in the business of demand optimization, you'll know that it's been getting harder and harder to talk about any trend in multifamily without first referencing the ten years of unprecedented growth that the industry has been experiencing.  For as long as anyone can remember, residents have been relatively plentiful. That's great news for operators and investors, but a growth environment can paper over cracks in sales and marketing performance.

This inescapable trend was on our minds when we embarked on a new study of lead conversion tactics.  A couple of weeks ago at the AIM Conference, we published a new white paper "Converting Leads to Leases." It is an update to a study that we had run previously in 2014 and 2017.  

The results of the first study were instructive, presenting a call-to-action for marketers and operators.  They highlighted the extent to which operators were failing to implement some of the most effective and least expensive tactics for increasing lead conversion.  We updated the data nearly three years later with an identical study, which yielded mostly similar results. The 2019 paper reproduces the methodology from those studies to report back on how the multifamily marketing has progressed in the last five years. 

Read More

Topics: multifamily sales, lead management, Multifamily Trends

What to do About Challenging Multifamily Recruitment and Retention

Posted by Donald Davidoff on May 13, 2019 9:45:00 AM

Given sustained, record low unemployment in the general economy, it’s not surprising that attracting and retaining quality associates is universally regarded as one of, if not the, most challenging parts of a senior executive’s job these days. Simply put, it’s an employee’s market!

That was one of the least surprising insights from our 20 for '20 research - where we asked 20 senior multifamily executives for their perspectives on the industry outlook for the next few years.  Given the generally challenging conditions for talent acquisition and retention, we were keen to learn more about what strategies and tactics worked best for our 20 executives in this tight labor market.

Read More

Topics: leasing associates, Multifamily Trends