Previously owned by Western Rim Property Services (WRPS), an active adult living property in Rockwall, Texas, was built in 2010. The 220-unit asset east of Dallas offers luxury amenities that include a 7,000 square foot club house, resort style pool, spa and an on-site restaurant. The property began using revenue management in January 2012, shortly after completing lease-up.
The onsite team was apprehensive as to whether a more progressive pricing strategy would be successful given the target demographic of active adults ages 55+. Their concerns centered largely on their preconceived notions regarding the price sensitivity of the demographic and the concern that frequent price changes would create distrust in the relationships they were building with current and prospective residents. As a result of these apprehensions, the revenue management system was used inconsistently from January 2012 until Revenue Edge began overseeing daily pricing in March 2012.
WRPS and Revenue Edge partnered in order to create a pricing strategy focused on education and communication which resulted in a successful marriage of operational expertise and analytics.
The educational component of the pricing process was two-fold. Emphasis was placed on getting the team up to speed on the fundamentals of the revenue management software so that they would become more comfortable with how the program worked. Developing a basic understanding allows the team to gain trust in the software thereby allowing them to see that they can work hand-in-hand with the system to make sound business decisions. The other educational component was more prospect and resident focused - the emphasis was placed on helping the team use the program to sell their product without feeling as if the prospect or resident was disadvantaged in any way.
After gaining a fundamental understanding of the software, and the reasons for the recommendations, the manager was able to communicate more confidently and more effectively with the Revenue Edge team. Having an open line of communication where the manager is comfortable that their input will be heard and will be influential in the operation of their business is key to the success of revenue management.
Overall, the process enabled the team to focus on making the best business decision for the property by removing the emotionality from the process. By allowing the system to work, and being willing to confidently step outside of their comfort zone, the property was able to see results that were beyond anyone’s expectations.
When it appeared that prices had topped out, and that results surely would not be as strong year-over-year, the manager was willing to try further increases when proposed, and saw success at an even higher level.
During the 24 month strategic partnership with Revenue Edge, the property achieved an impressive 21.8% increase in the revenue per occupied square foot.