Blinded By The Concession Therefore Unable To See The Need For Revenue Management

I really am not for sure who is more blinded by the concessions; leasing, management or the prospective resident.  But what I do know is that the once declining economy caused the blindness, and we are preventing the now stabilized and slowly increasing economy from becoming the cure.

Let's start with concessions, then and now.  A year plus ago move-in and renewal concessions were needed to actually motivate paralyzed renters to stay or move.  Prospective residents could not bring themselves to even consider a community unless there was a substantial concession in place.  Most of these concessions ranged from one to three free months of rent.  Along with these concessions, companies were also dropping their market rents bringing their revenues to an all time low.

Today the motivation for offering concessions should be looked at differently.  Concessions should not be considered required as historically, but instead should be considered as a marketing attention grabber.  Many companies cannot fathom raising rents while offering concessions.Why not?  Will the "Rent Raiser Cops" come and arrest you?  Don't let concessions blind you from the continued need of revenue management.  Even as you continue to offer and decrease your concessions from one month to half a month, you can raise your rents $3, $9, $17 or $22 along the way. The concession today is merely to get your community to stand out in advertising, get the prospective residents attention and to motivate the initial inquiry call.  You know the old retail trick, mark up the sweater 20% and then have a 25% off sell, therefore only sacrificing 5%.

Provided you have a strong sales team in place, who energetically narrates your amenities and strongly believe in the product they represent ... then they can turn that concession generated inquiry into a higher rental amount lease.

Look at the statistics.  People are spending again, not at the original rate, but definitely spending.  Car sales are increasing, 2010 Christmas spending was way up compared to 2009 and the hospitality industry is reporting huge increases in restaurant food consumption and hotel overnights.

What makes the apartment industry impervious to these positive spending trends?  YOU and YOUR TEAM!  So, go out on an untraveled limb, keep your concession to grab their attention, but raise your rents behind the scenes.  Revenue Management is alive and well ... you just need to practice it a little differently.