Price Units Right in Student Housing with Revenue Management

Every time you buy a plane ticket, rent a car or book a hotel room, an algorithm somewhere calculates exactly what you should pay on that particular day, based on availability, class and amenities, competitor pricing, season, historical data and other criteria. The algorithm balances supply and demand by adjusting prices to help business managers generate the highest possible revenues in a way no human (or even team of humans) could ever do on a daily basis. Since around 2000, multifamily owners have been implementing commercial revenue management technology for rent pricing. Today it’s credited as a vital ingredient in the recipe for optimizing asset performance. Student owners and operators, however, are in the early phases of adopting revenue management tools. This is mostly due to the perception that student housing is “different” due to factors such as the strongly seasonal nature of lease expirations and new leases, renting to a waitlist, and the leasing of beds rather than units (not always a particular bed, either). While student housing is different in these regards, the difference does not diminish the value that a commercial revenue management system can deliver in the student space. It’s expected that more and more student properties will follow the rest of the industry in using the technology to eliminate guesswork and maximize profit. Download Now: Campus Advantage Case Study  Leaving money on the table Some student properties regularly leave money on the table simply because they’re not pricing beds in an optimized manner. Some properties offer volume or time-based tiered pricing models that increase or decrease as beds are leased. A property may set the rate at $400 by renting early for the fall semester, $420 when half the beds have been booked, and $450 when there aren’t many left. This seems like a logical approach to pricing at first glance. But is it really? Many of the beds renting earlier in...