More Revenue with Less Hassle

By Anuradha Kher, Online News EditorWhether times are good or bad, disciplined revenue management itself, or unique ways of generating additional revenue, can increase a property’s bottom line. How are savvy owners/managers boosting their revenue in this tough economic environment?WestCorp Management, formerly Alliance Residential of Texas, uses technology to streamline bill paying and rental collection. Managing 45,000 multifamily units across the U.S., WestCorp Management is part of the Nevada West Development (NWD) group of companies. It has found that automation is impacting its net operating income (NOI) and the overall bottom line in a positive manner. The company recovered $1 million on utilities when it rolled out the NWP program.“The outsourcing of our utilities and rent bill processing to NWP has resulted in huge cost savings for our company,” says Mark Copeland, chief operating officer of WestCorp. “We no longer process these bills at the corporate or site level, and not having all those additional bodies, is a huge advantage. It helps us streamline every dollar and cent.”“There is a cost associated with NWP (an additional $3 to $5 a month per unit). But you can expect additional revenues through gas bill backs etc. to offset those costs. We see a 20-25 percent return on investment on an annual basis.”In a manual system, Copeland explains, they would miss late fees and penalties—and this can add up to a large amount in case of a portfolio generating huge bills.Bryan Head, vice president of operations, WestCorp, adds, “Managers can focus on resident retention instead of spending time behind their desks sorting out the bills, putting them into the system and shipping them to the corporate office which in turn increases the revenue of a property.”Making the Internet work for youProviding free wireless Internet connection across apartment communities can help in resident retention or in attracting a different class of clientele to the property. Charging a fee for the Internet connection can help in generating additional revenue.Cliff Orloff, owner of Riverfront Apartments, implemented Wi-Fi at his property to provide residents with free Internet access. Meraki’s solution allowed Orloff to install Wi-Fi throughout his 143-unit, 20,000 sq.-ft. property in one day. By implementing free Wi-Fi, Orloff has seen a different class of clientele applying for his property. He plans to have it across all his four properties featuring 630 units in the near future.“I offer it as free service because if I charge people, they will expect it to work fast and there will be no room for outages, slow speed etc. The headache will not be worth the revenue it brings in. “I think the fact that the property is Wi fi enabled increases the occupancy. There are no hard numbers to prove it, but I know that a majority of  residents use it. I think between a property that has a gym and another one that has free Internet connection, most people would prefer having Internet,” says Orloff, who adds that it’s a better amenity and it costs less to implement on your property.Amenity audits reveal missed opportunitiesAnother way to boost revenues is to re-visit amenities across a property and examine whether they are fetching the kind of interest and premium the property owner/manager intended. They are called amenity audits and can help in increasing revenues up to 5 percent.Emily Dreyfuss, pricing revenue manager at Windsor Communities, affiliated with The General Investment & Development Companies of Boston recently worked with the Rainmaker Group’s revolution LROTM Revenue Optimization to boost incremental revenue across Windsor’s properties by conducting amenity audits.“First, we realized we were missing opportunities in both over- and under-amenitizing. Then, we reviewed our unit type consolidation to see which units could share a common base price. Our revenue managers then reconfigured our amenity pricing set up to incorporate descriptors like fireplaces, granite counter tops and beautiful views, which tailored our offerings to individual customer preferences,” says Dreyfuss. “With some units, we found features that are more desirable and in others found that people don’t see the value in what we did.”Windsor has reviewed 33 properties so far, which includes a total of 12,250 units.As a result of the audits, sales teams know exactly which unit has premium attached to it and why, and are therefore more confident in selling. “The increased revenue also comes from the apartment being occupied faster. Rent also went up for certain apartments,” says Dreyfuss.Amenity audits give the sales force visibility into the rationale of each unit’s price via meaningful amenity descriptors and pricing reports; maximize a property’s online presence with key features and corresponding prices; and develop a strategy for regularly measuring the effectiveness of specific amenity prices.“Amenity audits have been standard practice for many years,” says, Annie Laurie McCullough of the Rainmaker Group, “but we wanted to make improvements to the process and make it more streamlined. We have now come up with a seven-step process, which is not rocket science but it’s what property managers having been doing in a more methodical manner. Windsor Communities saw a 3 to 5.2 percent lift in revenue, but some of that has to be attributed to overall revenue management.”