NMHC OPTECH 2018 is in the books, and once again this year the mix of fresh ideas and great minds to discuss them with made for a great conversation. Those who made the trip to Orlando got to consider which emerging technologies will own tomorrow, and which - in the home of Disneyland - will be consigned to the realms of fantasy. Below are some highlights from the show.
Smart home technology has a high profile in the industry right now, and there was no shortage of exciting new technology on show. Keyless entry is gaining popularity, and a group of vendors discussed the opportunity on Thursday morning.
During the panel, Vivint presented some research into the impact of the technology on residents’ appetite for other services. The services in the survey were: House cleaning, Dog walking, Grocery Delivery, Laundry/Dry Cleaning, and Babysitting. The results compared the attitudes to each of residents with smart access and residents without it. The levels of comfort were high and positive in keyless entry environments and low and mostly negative in properties without – clear findings at first glance.
It’s appropriate, however, to be skeptical of survey-based research like this. House cleaning and babysitting services tend to be performed by people familiar to the resident, so it’s hard to see how smart locks have such an impact (I am an enthusiastic consumer of both services, and my door locks are not a factor in my consumption). However, irrespective of the individual data points, collectively they suggest that smart home technologies matter to the customer experience.
The view of the panel - perhaps unsurprisingly - was that core smart home technologies smart access is becoming a “ticket to play” in an industry that is increasingly coming to expect it, at least in more upscale properties and markets. It is also foundational to many other innovations - one panelist noted the increase in close rates on self-tours, a service for which keyless entry is a prerequisite.
It will be interesting to see how popular smart home technologies will be beyond the upscale urban properties where they are currently being implemented the most aggressively. It will be more interesting still to see whether or not smart technologies will lead to higher rents.
The Short-Term Rental Market is Anything But
Unsurprisingly, given Expedia’s recent acquisitions, short-term rentals were prominent at the show. Tom Geyer of the Bozzuto Group moderated a panel that included - amongst others - technology and service providers Niido (powered by Airbnb) and ApartmentJet (recently acquired by Expedia). Geyer teed up the discussion with the idea of the “migrant dweller” - a growing segment of the rental housing market that defies conventional market segmentation for both apartments and lodging.
Panelists discussed how to address this amorphous market through the lens of their business models. Pillow (also recently acquired by Expedia), for example, enables renters to sub-let their apartments while giving community management visibility of what they’re doing. It positions the ability to organize short-term rentals as an amenity to the resident and a risk management measure to owners. ApartmentJet, on the other hand, makes it easy for operators to make units available for short-term rentals.
Lyric positions multifamily units for short-term hospitality, while Niido takes that model to its extreme, taking over entire buildings and running them as Airbnb “hotels.” Under the slogan “Live a life worth sharing” - residents are encouraged to rent out their apartments, often as a smart way to subsidize their rent. The model also gives Airbnb more control over the customer experience, serving the long-term objective of keeping Airbnb guests in-system, rather than defecting back into hotels.
The spectrum of business models roughly mirrors the spectrum of different attitudes toward delivering short-term rentals. The rewards of short-term rentals are considerable, but entail operational stresses as properties turn units, and risks as we invite different profiles of renters into our communities. We are at the early stages of the development of this sector, but the presence of behemoths like Airbnb and Expedia in the industry suggests that the growth is all ahead of us.
How to Think About AI
To check the final box on the technology “buzzword bingo” card, the rise of AI was discussed in several breakouts. A broad-ranging general session saw industry leaders from Greystar, Related Companies and BH management touched on current AI initiatives and viewpoints.
Operators described their current AI activities as “dabbling,” with little consensus yet on which problems the technology will solve effectively. Jeff Brodsky of Related noted that AI will enable us to mine data about behavior, which promises vastly richer insight than the surveys that we rely on heavily today. Sentiment analysis on social media was another area of interest, along with the usual discussion of automating repetitive, time-consuming tasks.
The idea of AI automating routine tasks had also surfaced in an earlier panel, about AI and Business Intelligence. That discussion, however, focused primarily on dashboarding, with panelists relegating AI to the limited role of automating BI processes and making them run more quickly. Panelists stressed the need to agree on the metrics to be reported - a good BI principal, to be sure, but one that misses the point of AI. For AI to benefit analytics - especially predictive analytics - operators need to get comfortable with its ability to figure out what insights are relevant, even if they aren’t the same ones we usually request.
It occurred to me that the OPTECH program could use an educational session to baseline what AI is and showcase some current applications. We got that session on Friday morning, as a panel of AI vendors - moderated by our own Donald Davidoff - shared their experiences.
Roger Lloyd, the CEO of Truedge AI had some sound advice: don’t get too hung up on the technology. It’s complicated and new, and hence easy to get stuck in. Instead, operators should focus on understanding more about the problems that we might want the technology to solve - which is a question about process rather than technology. Think about which tasks are the most repetitive, and are performed by people in roles that characteristically have high turnover. When we frame the question like this, we start to see low-hanging fruit.
Ryan Eisel of Slalom Consulting shared applications outside the multifamily industry, where - for example, a retailer would have to assemble a room full of analysts to review data and identify their observations from it. That used to be the most efficient way of “crowdsourcing” insights that could drive strategy. It’s easy to see how - in this example - a great deal of time and effort was saved by using an AI to extract the insights from the data. The more significant upside is that the AI has the potential to identify trends that humans might never think of looking for.
Closer to home was a great example from Marc Rutzen of Enodo: unit amenity valuation. Amenity pricing is close to our hearts at D2, but the accepted analytical approaches in our industry have yet to find a good way to predict the value of amenities, due to the relatively small number of observations. AI opens a new range of opportunities - pulling data from groups of properties, neighborhoods, cities and beyond, adding infinite data sources and variables and searching incessantly for insights. This is where the analytical power can be of enormous benefit, but we are some way off understanding and harnessing it in our industry.
Overall, OPTECH 2018 was as thought-provoking as ever, with what felt like a greater focus than usual on technological mega-trends that one feels will take several years to play out. We look forward to continuing the discussion and thank NMHC for another excellent event.