Correspondence: Jian Wang, Rainmaker Group, 5755 North Point Parkway, Suite 77, Alpharetta, GA 30022, USA. Tel: +1 678 578 5704; E-mail: jwang@LetItRain.com

¹Jian Wang is Vice President of Research and Development at the Rainmaker Group, which develops pricing solutions for gaming resorts and multi-family housing industries. He has more than ten years of experience in designing and building diverse pricing and revenue management systems. Jian was principal scientist and developer at Archstone-Smith and Talus Solutions (now JDA). He has published several papers in professional journals. He holds an MS in applied mathematics and PhD in statistics from Clemson University.

Received 1 October 2007; Revised 1 October 2007; Published online 22 February 2008.

Abstract

Revenue management (RM) has been successfully employed by diverse industries to utilise vast data warehouses to forecast demand and supply and price products to maximise profits. The apartment industry, however, represents a new frontier for RM. This industry shares many characteristics with the hotel industry, but presents new challenges such as extremely long lengths of stay and relatively small transaction density. The objective of this paper is to introduce the implementation of an apartment dynamic pricing system with particular emphasis on setting optimal rental rates for new leases. Optimal rental rates are recommended as weekly rates based on unit type and lease term for a finite horizon of future weeks. This paper studies the characteristics of apartment firms, and discusses similarities and differences between the apartment and hotel industries from an RM point of view. It then provides the overview of an apartment dynamic pricing system, followed by a detailed description of its modules. Finally, it concludes with ideas for future enhancement to the system.