You probably already know that D2’s CEO, Donald Davidoff, revolutionized the multi-housing industry seventeen years ago when he led the team that built the first automated pricing and revenue system. But he certainly wasn’t content to rest on his laurels. Donald, an engineer by training, has continued to transform the industry with a holistic viewpoint tied together by a common thread: data.
Multifamily Matters, a national weekly radio show dedicated to interviewing the best in the industry, was eager to have Donald on as a guest so he could share his unique perspective. After all, as host Paul Marks pointed out, not only was Donald prescient about the multifamily industry’s need for analytics, he has continued to be a “legendary thought leader” for Pricing and Revenue Management (PRM).
Here are some highlights from Donald’s hour-long interview, followed by a link to the full conversation with Paul Marks and Donald’s former client, Brian Hilton. Hilton is the current head of PRM at Simpson Housing, which was the second multifamily operator in the industry to implement PRM software.
1. How Did PRM Begin?
Donald, who has been in the multifamily industry since it all started, shared first-hand stories about the origin of pricing and revenue management. Learn more about the 1979 airline deregulation, Archstone-Smith Trust CEO Scot Sellers, and Donald’s own involvement in building the first pricing and revenue management software for the industry.
2. A PRM Overview
Marks asked Donald to break down pricing and revenue for listeners who might not be familiar with the idea of it as a discipline. Donald summed it up simply: “Pricing and revenue management is trying to get the right product to the right person at the right time for the right price with the goal of maximizing operating revenue for the next 12 months.”
And, he pointed out, if you’ve ever shopped for an airline ticket or a hotel room, you've seen dynamic pricing that’s constantly in flux. These principles can seem somewhat arbitrary, but these companies are using a very sophisticated approach to maximize the value of fixed assets.
3. How PRM Contributes to Profitability
The combination of Donald’s engineering background and his experience in other industries gave him a unique perspective about PRM: “Because there are so many variables that come into play, we just knew from experience in these other industries that bringing computer power to help people make decisions was going to give a better result.”
He points out that it’s important to explain “why” a price should be what it is and to build a case using statistics. However, as in any other industry, there is an art to change management, and Donald shares his most effective techniques to get the whole team on board.
4.Ways PRM Has Changed the Multifamily Industry
Today, the industry is much more math-minded. Gone are the days when reports were run once a week (or once a month!) and when pricing was based on gut instinct. Today, multifamily operators demand accurate and up-to-the-minute data before making pricing decisions.
As Donald explains, pricing and revenue management influenced the industry to be more analytical in other ways as well, including business intelligence, marketing and credit screening. Hear about the latest developments!
5. Forecasting the Future of PRM
Donald’s engineering background and extensive multifamily experience are apparent in his data-driven predictions. For example, he believes segmented pricing for different segments or different channels is on the horizon. Donald also expects that Artificial Intelligence (AI) will result in significant advances for many industries, including multifamily. (For a more in-depth take, one of his recent blog posts, The Multifamily Executive's Quick Access Guide to Artificial Intelligence separates the hype from the reality and discusses the potential impact on the multifamily business.)
These five areas are just a small excerpt of Donald’s thoughts on the industry. To hear the full hour-long Multifamily Matters interview, listen toEpisode 20, PRICING AND REVENUE MANAGEMENT IN THE MULTIFAMILY INDUSTRY.
Don’t miss out on insight from a thought leader in the industry who has been there from the ground up!