BOTTOM LINE: ASSET MANAGEMENT
APARTMENT FINANCE TODAY • NOVEMBER/DECEMBER 2007
Revenue Management
Market Heats Up
Yardi developing revenue management solution
to fend off leaders RealPage and Rainmaker.
By Jerry Ascierto
The revenue management
software market is heating
up as 2007 comes to a
close, with Yardi set to
compete head-on with
industry leaders RealPage
and the Rainmaker Group.
Long a mainstay in the airline and
hotel industries, revenue management
software, or yield management
software, has made its way onto the
servers of some of the largest multifamily
property managers in the last
year. The continued development of
such software will ultimately lower
its price and expand its use among
mid-sized and smaller owner/managers.
The software analyzes a variety of
data—seasonal traffic rates, weighted
competitor rents, and recent demand
among them—to recommend pricing
for a given move-in date, unit type,
and lease duration, maximizing rents
for each community in a property
management firm’s portfolio.
In July, Yardi began beta testing
of its revenue management product
through some of its customers. The
product surveys competitors in the
market and offers a pricing model
that the user can help shape by
inputting parameters such as comparable
rent analysis or the number of
days a unit is vacant.
The product will compete with
the Lease Rent Optimizer (LRO)
software from the Rainmaker Group
Inc., which began life integrated
with Intuit’s MRI Residential software
platform. While the new tool
from Yardi integrates with both the
leasing and accounting components
of its own software suites,
Rainmaker also works with Yardi’s
Voyager platform, as does RealPage’s
M/PF YieldStar.
Rainmaker’s LRO continues to
gain market share. In August, Mid-
America Apartment Communities
reported an increase in average rents
of 3 percent in a pilot test of LRO on
seven properties, measured against a
control group of seven similar properties
that set rates manually. Also in
August, Carmel Partners, Julian
LeCraw Co., and Laramar Group
began a pilot installation of LRO, and
current customers include Simpson
Housing and Equity Residential.
RealPage’s Price Optimizer product
leverages that company’s market-
research data—such as area
occupancy rate and rent forecasts—
to help property managers see what
the market will bear on a day-by-day
basis. The product, like the
Rainmaker Group’s LRO, also
includes a forecasting tool that uses
seasonal data to provide supply and
demand reports for specific floorplans.
In the summer, real estate
investment trust UDR, Inc., which
owns 70,325 units across the country,
began installing YieldStar
throughout its portfolio of properties.
FIRST ADVANTAGE,
INTUIT ROLL OUT
INVESTMENT TOOLS
The revenue management software
industry has seen more competition
from other sources this
year. Two new software products
that weigh the economic viability
of a potential acquisition or development
were recently released.
Intuit released IMPACT in the
summer, a tool that helps companies
create and model multiple
investment scenarios and estimate
the short- and long-term financial
impact of alternative decisions. The
product was engineered as a
standalone product, and it integrates
with all of the leading property
management software suites,
including Yardi’s Voyager.
Earlier this year, First Advantage
SafeRent released MarketVISION,
an application that analyzes sitespecific
market data to weigh the
merits of a potential development
or rehabilitation opportunity in a
given market.
MarketVISION analyzes resident
data pulled from a database of
about 40,000 properties and
updated daily, using rent income,
traffic quality, and resident demographics
to paint a picture of a
development opportunity in a
given neighborhood. Comparable
properties are analyzed to give a
snapshot of rents and how they’re
distributed in the submarket.
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