The Complexities of Managing Maximum Revenue
The Complexities of Managing Maximum RevenueTechnology, Top Stories Jan 14, 2011
By Jeffrey Steele, Contributing Editor
Ever notice how the price you paid for your airline seat can be different than that paid by your friend across the aisle? The anomaly flows from airlines’ computerized pricing systems, which mix multitudes of supply-demand factors and spit out the highest price the flier is likely to accept. As these factors are ever-changing minute to minute, prices for the same flight change regularly, too.
The same forces are at play in revenue management, a technique being embraced by more and more property managers. Revenue management is the perfect blend of occupancy, rent and lease terms in order to achieve maximum revenue across all market conditions, explains Bruce Barfield, principal at Alpharetta, Ga.-based Rainmaker Group, maker of LRO, a revenue management solution.
“It’s a process considering supply, demand, price sensitivity, seasonality, expiration, renewals and other statistical factors such as skips, evictions, early lease terminations and the like when determining lease prices,” he says.
While the adoption of revenue management technology was initially slow, “growing recognition of its benefits among multifamily property owners and managers could produce double-digit implementation growth over the next 12 months,” predicts Brad Setser, vice president of marketing at Santa Barbara, Calif.-based Yardi Systems Inc.
Steve Lefkovits, editor-in-chief of MultifamilyRevenue.com, believes it’s only the early adopters who have seized on revenue management’s potential. Of the professionally managed apartment communities in the United States, just 10 percent to 15 percent are using some revenue optimization system. “The future will bring broader adoption,” Lefkovits predicts.