The two industries served by Rainmaker Group — apartments and casinos — may seem as different as oil and water. But the Atlanta-based software and services firm caters to both by making the task of filling units and hotel rooms less risky. Rainmaker helps apartment owners gauge real-time, comparable rents. The company also enables casino hotels to reward their most profitable guests and increase the odds they'll return for another visit.
Since its founding in 1998, Rainmaker has worked with apartment firms such as Archstone-Smith, Equity Residential, Post Properties and Simpson Housing. The firm has alsonetted a bevy of leading casino hoteliers including MGM Mirage and Trump Entertainment Resorts. NREI recently spoke to Farley about how Rainmaker software is driving revenue growth for more than 500,000 combined multifamily and hotel units.
NREI: How do your profit-optimization products for apartment operators work?
Farley: They let multifamily housing operators maximize revenue from apartment leases. The software looks at data and accounts for seasonal and recent demand, and how much traffic they're getting. It also takes into account different types of leases, those that [originate] at the beginning and end of the month. Plus, it factors in vacancy costs, new demand versus renewal demand and lead times for lease applications.
NREI: How does this technology benefit REITs and other apartment owners/operators?
Farley: Executives always want the most current market information. This allows them to change prices immediately and gauge when markets are changing from good to soft, or vice versa. A COO can view the portfolio's performance, look at traffic and pricing over a set period and get a more accurate picture of his company and the industry. Stock analysts are starting to ask REITs if they're using revenue-management solutions.
NREI: How do you measure the effectiveness of these products?
Farley: We measure [additional] revenue per unit on a monthly basis. The minimum revenue lift has been 3% and the top is 5%, with an average [revenue increase] of 3.8%. Results are confirmed with third-party validations from independent accounting firms.
NREI: Your typical clients are apartment REITs. Can this system benefit smaller owners?
Farley: We've worked hard to scale the operation both up and down. Our smallest apartment customer has 4,000 units.
NREI: How does the casino hotel product help determine the “value” of each guest?
Farley: It's done by factoring in property demand, guests' gaming tendencies and other variables to set room rates. Casino companies already have rich databases. For example, with Harrah's Total Reward program, a guest will get a number based on who they are, what they're spending and what their value to the company is — a value that can also come from food and beverage and spa use, or even golf use.
NREI: How can casino hoteliers gauge their “marginalized revenue”?
Farley: If you play and lose $100, the casino's margin on that isn't a full $100. There are labor costs, for example. When they're pulling in non-room revenue sources, such as on-premises restaurants they don't own, the hoteliers are getting a marginalized percent.
NREI: What are the costs for the two products?
Farley: In the multifamily sector, costs range from $1.75 to $3.50 per unit, per month. Casino costs are tiered based on the number of rooms.