Perfecting the art and science of setting rents appropriately to fill vacant units has long been the Holy Grail for the apartment industry. To that end, many apartment owners and managers have turned to automated revenue management systems, which use sophisticated mathematics to determine real time rents similar to the way the hotel and airline industries set their demand-based pricing. Large national and regional firms were the early adopters of this technology—their bigger footprints suggested scalable benefits—but many of the up-front costs, integration hurdles and cultural shifts that go along with implementing the systems left many smaller firms on the sidelines, waiting to see how the transitions to the new systems would play out.
But as the balance-sheet benefits have become clearer since the early days of revenue management and pressure from the ROI-seeking investment community continues to grow, smaller and mid-sized industry players are now more seriously considering pulling the trigger on automated revenue management systems. While these systems offer many advantages for smaller owners and operators, there are numerous questions that they should be asking beforehand and implications both during and after implementation. So, before making the big purchase, revenue management experts offer up five things that every smaller owner and operator needs to know about revenue management.
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