Finding Revenue in Tomorrow’s Amenities
Providing services are the future in amenities. There is potential to earn revenue from both vendors and residents, but there are hurdles.
If you a take a tour of new apartments in major cities, you might see some crazy amenities. Climbing walls, bicycle ramps, pet salons and even chicken coops have made their way into the industry’s newest offerings.
But panelists on the “Revenue and Amenities” session at Maximize last week in Austin saw services, such as dog walking, dry cleaning and even washing skis (where appropriate) as the biggest opportunity for apartment owners, even if residents will not pay for them directly.
“It is about convenience,” says Everett Lynn, Founder and CEO of Amenify. “You do not really know what is important until you offer a suite of options.”
When apartment owners face decisions about a service offering, amenity upgrade or a technology solution to provide a differentiated resident experience, Lisa Trapp, Vice President of Marketing at CWS Apartment Homes, applies three simple questions to base her decision: Is it easy? Is it efficient? Is it enjoyable?
For communities that require residents to carry separate keys for the parking garage, their gym and their apartment, a smart lock system may make sense from an efficiency and ease-of-use standpoint. “Having a different key for the gym, your home and a parking garage is an inconvenience,” Trapp says.
Instead of trying to tax an already burdened management staff, Lynn suggests reaching agreements with applicable service providers. “You really need a managed marketplace to curate for the community,” he says.
While these services can give residents more time in their day and may foster loyalty, the jury is still out on whether they add revenue either through ancillary income or profit sharing with vendors.
Because residents hate add-on fees, Lynn has a strategy for owners who do want to pass costs onto residents. “If you want to directly monetize these services, don’t ask the resident to pay upfront,” he says.
If residents will not pay to use services, will vendors be open to revenue sharing? Opinions are split.
As service providers continue be bottlenecked by access in multifamily buildings, they may be open to revenue sharing. “Over time, the dog walking services and other on-demand services may provide revenue for apartment owners,” says Ali Hussain, COO of Latch.
But for companies like Amazon, who install storage lockers, revenue sharing may not be possible.
“It will be tough to foster relationships with people who have a model that does not depend on revenue sharing,” says Susan Vickery, Managing Director for Trammell Crow Residential.
Vickery should know. TCR recently inked a five-year agreement with the online shopping giant. “The value play was being associated with that brand,” she says. “And using them is cheaper.”
While retail behemoths may not pay directly, they will subsidize these amenities. Using Walmart’s Jet.com sponsorship of access control readers as an example, Hussain pointed out that Jet.com paid for Latch hardware, software and installation for 1,000 buildings in NYC, saving apartment owners cap ex budget and lowering the amount of friction to adopt the leading technology.
Want more information on how to increase your NOI? Join us at next year’s Maximize at the Omni La Costa Resort & Spa outside San Diego from October 1-3.