“Surveys are a great way to measure consumer attitude, but they're lousy indicators of future behavior, and when it comes to reading the mind of the consumer, humans are lousy statisticians.” So says Robert Cross, the author of Revenue Management: Hard Core Tactics for Market Domination and the keynote speaker at the inaugural Apartment Revenue Conference, which drew 263 attendees to the Westin Kierland resort in Scottsdale, Ariz., this week for a three-day confab dedicated specifically to the use of price optimization systems in the multifamily sector.

A recognized pioneer and oft-described “guru” of revenue management systems, Cross told attendees that there is no other single investment they can make that will provide a better ROI than the adoption of a revenue management platform. He should know: After he launched revenue management technologies for Delta Airlines in 1984, the company saw $300 million in incremental revenue gains in the first year. While apartment firms typically see a less influential revenue lift of between 2 percent and 5 percent relative to the market when rolling out revenue management, Cross nevertheless proselytized the significant role that the systems are playing in the apartment industry. “It gets the property manager out of the middle of the transaction,” Cross says. “And the important thing to realize is that revenue management is resident-centric—and it is not so much a technology initiative as it is a business initiative.”

Conference attendees echoed that sentiment, with apartment firms large and small and at various stages of system implementation universally describing a profitable experience leading to NOI growth and the discovery and development of new business intelligence tools. “This product has come a long way, and there's no doubt that it works. It is a godsend,” said Phoenix, Ariz.–based Alliance Residential senior vice president Brad Cribbens, who moderated a panel featuring Greystar CIO Tom Bumpass and Axiometrics president Ron Johnsey that compared the financial performance of revenue-managed properties with that of traditionally comp-priced communities.

According to Johnsey, revenue-managed communities consistently show a rent premium over their non–revenue-managed peers. “That’s even while maintaining a 94 to 96 percent occupancy over the past two years,” Johnsey said. “It is a very tight band compared to the variability and volatility on the non–revenue-managed side.” Of the 14,400 units surveyed by Axiometrics for the firm’s market reports, a full 25 percent have moved to revenue management, Johnsey said. Among the top 20 U.S. apartment markets, that penetration has reached 43 percent.

Much of the conference focused on the maturation of revenue management systems: specifically the ability to tie price optimization to marketing efforts and gain other significant business intelligence from the vast data sets and functionality provided by the technologies. “Revenue management systems maturing over time is a significant business phenomenon,” said Bumpass of the system life cycle thus far. “First we control inventory, then it moves to price optimization, then to margin management.  As you get smarter [with system implementation], you can even manage profitability by channel rather than relying on fixed cost structures.”

While acceptance of revenue management technologies has come a long way in the apartment sector, conference speakers and attendees weren’t oblivious to change management during rollout of the systems, and indicated that full acceptance of revenue management paradoxically had yet to penetrate the institutional investor set.  “Institutional investors are worried that it pushes rents down too fast in a declining market,” Cribbens said, adding that some underwriters may struggle with dynamic rents as they are building and penciling out investment pro formas.

Cross, who has also worked with Marriott International in the implementation of revenue management technology, says change management and incremental adoption have likewise been common in the airline, hospitality, and gaming industries as revenue management systems have matured. “Draw out objections and address them as part of change management,” Cross told attendees. “One-third of my time at Delta was addressing field logistics issues. You simply have to put a stake in the ground [and commit to the system]. View revenue management as a lifelong learning process."

For more information on the 2011 Apartment Revenue Conference, co-presented by the National Apartment Association and Apartment Internet Marketing, click here or check out the MultifamilyRevenue blog here.