There's been a lot of talk of downturns lately in Pricing and Revenue Management (PRM) circles. It was a major theme of the recent NAA Maximize conference and was also covered at NMHC OPTECH last week. While no one knows when the downturn is coming, everyone seems to agree that it's a good idea to plan for it. While occupancy and rent growth are still strong, the sheer length of the recovery since the last recession has everyone wondering how much longer this bull run can last.Read More
I think it was probably a record, and by some distance. A whopping 2,300+ attendees were registered for NMHC OPTECH, and it made for a busy, busy show. It will take us some time to decompress, organize and reflect on the many learnings and insights. While we do that, here are a few instant reactions from the show.
Self-tour is HOT!
Attitudes to several key technologies are quite different this year compared to a year ago. Nowhere is this more apparent than self-tour. Last year, as we interviewed operations and technology leaders for 20 for ‘20, we were surprised at the push-back against this exciting and impactful technology. While the range of views remains wide, the tide has clearly turned.
You might say that self-show has officially taken the place of short-term rentals as the hottest topic in the industry, as evidenced by the standing room only crowd at the “Cage Match” session on Tuesday. Several companies who are experimenting with self tours shared their experiences, which ranged from working with the tech solutions to running manual tests with their on-site staff handing out keys. The panelists shared their excitement about the initial success and stats they've seen thus far, and it seems set to grow in 2020.Read More
Can it really be time for NMHC OPTECH already? It appears so, and I’m looking forward to joining industry leaders and technology luminaries next week for what is usually one of the highlights of the fall, as we make our way to Dallas to learn about what’s new and what’s working in multifamily technology.
There are many reasons to be excited. It looks like there will be a record crowd for this year’s show, and it’s probably the proliferation of exciting new proptech that’s drawing the audience. But alongside the new and shiny, we will be taking some time to celebrate 18 years of multifamily Pricing and Revenue Management (PRM). This year I’m delighted to be leading the first PRM panel that’s taken place at OPTECH for years.
The fact that PRM has been strangely neglected for a few years at this leading technology show is at the heart of what this panel is all about. February of this year marked the 18th anniversary of the first-ever system implementation. However, the last ten of those years have coincided with unprecedented industry growth. There is good reason to think that it may be time to re-sharpen our focus on this critical capability and the technology that supports it.Read More
Lately, I’ve been talking to a lot of companies about business intelligence, and the ways that organizations attempt to deliver this key capability. While there is a broad understanding of the need to bridge the gap between the business and IT organizations, the evidence suggests that the gap remains unbridged at many companies.
A recent article on the subject from McKinsey: “Analytics Translator: The new must-have role” suggests that the rewards are getting bigger, rather than smaller for companies who succeed in providing business leadership for increasingly critical IT-enabled analytics projects. The logic goes that as data sets get bigger and data mining resources more sophisticated, firms will require a level of leadership that will ensure the maximum impact from their analytics.
The point of the article is persuasive; however, we have argued for a long time that this requirement already exists. In fact, it’s probably the biggest single reason why multifamily companies fail to reap the benefits of their business intelligence projects. As we explained in our own white paper: “Creating an Analytically-Driven leadership Culture,” if business people are blue and IT people are red, then the best business intelligence resources are purple. As both articles strongly suggest, purple people are among an organization’s most prized associates.Read More
Pricing and Revenue Management (PRM) has been in mass-adoption in multifamily for more than a decade. During that time, an industry talent pool has developed around the core technologies that companies use to manage pricing. The systems are sophisticated, enabling better decision-making and returns at companies that have been successful in incorporating them into their business processes.
Yet our experience tells us that some companies integrate PRM systems and processes into their businesses more effectively than others. While companies may use the same PRM software, many don't get the same returns as other companies that use it. Much depends on the human skills that companies deploy to ensure that the system is configured and operating in the way that it should be.
Given our depth of talent and experience in PRM, clients frequently ask us what they should look for in a good pricing and revenue manager. Our industry often places a heavy emphasis on multifamily experience when recruiting new associates, often for reasons. However, there are compelling reasons to apply different rules to PRM recruits (the discipline of PRM came from different industries, like hospitality and airlines, after all). While awareness of multifamily operations can undoubtedly be helpful, it honestly is not the most important qualification for a successful revenue manager.Read More
A few weeks ago, I wrote about some of the core skills of Pricing and Revenue Management (PRM) and how those skills have diminished in the industry talent pool during the last decade. As I explained - using Warren Buffett’s playful metaphor about tides and skinny-dipping - it’s relatively easy to deliver growth in a generally growing market. Skillful, difference-making PRM professionals are adept in delivering upside even in less favorable market conditions.
Nobody likes downturns, but having been in multifamily PRM for more than 20 years, I can attest to the stress-test that they impose on PRM capabilities and practitioners. If your pricing managers haven’t been pricing for at least 10 years, then they have never dealt with a softening market. That’s true whether they’re internal employees, associates of your third-party fee manager or serve on the staff on a pricing services team that is offered by your pricing software vendor.Read More
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
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
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
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