On The Fence
JPI experiments with revenue management.
The multifamily industry isn’t quick to adopt a new technology practice, and JPI is no exception. JPI has spent the last few years educating itself on revenue management systems and testing different systems at both its conventional and student properties. However, the company still has not yet decided to implement a company-wide automated pricing system.
“It’s been a two- or three-year learning process for us, and I feel like we could be farther down the road,” says Tom Bumpass, JPI’s chief information officer. “I just don’t think our business people have really been able to get their arms around the math and science yet.”
Two years ago, JPI tried Archstone-Smith’s LRO product at three properties for six- to nine-month periods. While the results were positive, JPI’s management team wasn’t comfortable with system’s recommendations. Next, JPI tested RealPage’s YieldStar system at a handful of student properties and is now using select elements of the system (now called Price Optimizer) at five of its conventional assets. JPI hasn’t deployed the fully automated pricing system as it’s still evaluating the function of the recommendation model, but hopes to head in that direction in the next six to nine months once its properties have converted to RealPage’s Web-based property management software.
As a merchant builder, JPI is a bit apprehensive of how the broker community will react to a dynamic pricing system. “We’ve got to make sure we have an effective way to represent to the market what our rents are so they are not confused on how to value our property,” says Bumpass. He suspects that JPI will give brokers a rent schedule of the most common lease terms.
JPI
- Units: 20,000 (owned and managed)
- Began using revenue management: 2004
- Properties on system: Five
- Software: Price Optimizer by M/PF YieldStar
- Words of advice: Always verify the quality of the data that gets filtered into the pricing system. Correct market comps can be especially difficult to calculate given all the concessions in the market. “A month off versus a month on is an 8 percent swing in rents,” says Tom Bumpass, chief information officer.
AMLI Residential Properties Trust
- Units: 29,800 (managed), 29,000 (owned)
- Began using revenue management: 2004
- Properties on system: Entire portfolio (except lease-ups)
- Software: Rent Cheque, an internally developed model
- Words of advice: Getting company buy-in can be more difficult than any technical glitches encountered. Get employees on board by explaining the system and providing feedback opportunities, says Greg O’Berry, president of AMLI Management Co.