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AIM 2019 Session Recap: Technology Investment Outlook 2020

Technology Investment Outlook 2020

Staying current with technology is in itself a challenging business, as property management systems (PMS), property revenue management (PRM) and business intelligence (BI) continue to evolve and adapt. But the results of a recent survey of 20 C-suite executives in operations and technology gave new food for thought at the 14th Annual Apartment Innovation and Marketing Conference (AIM 2019), which took place at the Hyatt Regency Huntington Beach on May 5-8, 2019. Moderated by Greg Lozinak, Chief Operating Officer, Newcastle Limited, panelists

 

  • Lisa Trapp, General Partner, Senior Vice-President, Sequoia
  • Dom Beveridge, Principal, D2 Demand Solutions, Inc.

 

shared highlights of the industry research by D2 Demand highlights. 

 

“We got a mixture of fee managers, public REITs and owner-operators of various sizes,” said Beveridge, in explaining D2’s methodology, “and we asked the same set of questions to all 20 people.” The survey uncovered five trends:

 

  1. The “One Big Project” Dynamic. In 2018, “one project” dominated 50% of the companies. Of these, 70% involved changes to PMS (including total switch-outs). The one projects were seen as foundations that would yield multi-year paybacks. 
  2. Tech Priorities and the “Hype Cycle.” The survey discovered that tech trends (smart home, self-guided tours, etc.) were not the priorities of these senior managers (in fact, only one percent listed Smart Home as being one of their current priorities). There’s a disconnect between what’s being talked about and what’s being done.
  3. Leasing and Sales is the Top Training Priority for 2019. “Everybody,” said Beveridge, “is re-visiting, re-thinking, re-doing leasing training.”
  4. Business Intelligence is a Slow Burn in Multifamily. “There’s never been a ‘Big Bang’ for BI in multifamily,” noted Beveridge. “We think it’s because BI is being misused as software- or reports-driven, whereas BI is best-used for extracting data for immediate decisions that move the needle on performance.” 
  5. “Revenue Management” Turned 18 this Year. And now what? “PRM has really fallen off the senior management agenda in recent years. Every single technology head we spoke to said, ‘We haven’t been close to revenue management in years.’”

 

Responding to D2’s survey, Trapp noted that Sequoia had already rolled out or implemented the technologies included in the report. In deciding which technology to implement, Sequoia asks,

 

  • Is it customer positive?
  • Is it revenue positive (or at least neutral)?

 

As an example, Trapp cited a case study developed by her team about launching short-stay rentals in the Sacramento area. Converting vacant apartments into short-stay rentals increased revenues and occupancy rate, so it was a green light from the revenue-positive POV. But, as part of the customer-positive pitch, “We thought there would be a value-add: That friends and family they could stay on-site during the holidays, and they book it themselves on one of the online travel sites that our units are now marketed on.” Although it’s early days, Trapp notes that occupancy has increased slightly but vacancy loss has been halved. 

 

And there’s no cash-on-cash: by using technology to book short-term stays in vacant apartments, Trapp said, “A building can have a 16 percent increase in value from 2018 through 2021 without doing anything to it.”

 

Conclusion: According to Beveridge, multifamily is at the technology tipping point. “If you look at the confluence of tech - of AI, of short-term rental platforms and of self-guided tours, it feels like we’re going into a phase of adoption.” 

 

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