Brookdale unveils new pricing model
The country's largest senior living operator is following in the footsteps of the country's largest independent living operator by rolling out a new pricing model that can tailor rent levels to individual communities and units within them.
Brookdale Senior Living is now using revenue management firm Prorize's Senior Living Revenue Optimizer system across more than 170 independent living-focused properties after a pilot test resulted in a “significant revenue lift.”
It's the same pricing system for which Holiday Retirement and Prorize received the 2017 Franz Edelman Award for Achievement in Operations Research and the Management Sciences in April from INFORMS, an international association for operations research and analytics professionals.
At the time, Prorize co-founder and CEO Ahmet Kuyumcu, Ph.D., told McKnight's Senior Living that the model uses advanced analytics and considers factors such as housing prices in a particular market, the competitiveness of the market, the number of competitors within a certain-mile radius, the median age of the population surrounding a community (considering prospective residents and their family-member influencers) and historical sales at that location. At the unit level, he added, the price formula is affected by variables such as a unit's location within the community, whether it is on the same floor as the dining room, and the views out the unit's windows.
Brookdale began working with Prorize in the summer of 2015. Although the company has not disclosed the revenue increase it has seen under the SLRO system, Kuyumcu told McKnight's Senior Living that Brookdale's test of the SLRO system “was as successful as Holiday's.”
Holiday said it consistently has experienced a 10% revenue increase in new leases since the new system was fully deployed across its 300 communities in 2014.
“We are extremely proud of our work with Brookdale,” Kuyumcu said.
Brookdale President and CEO Andy Smith said that the impact of the pricing system has been “significant.” “It has been the catalyst for multiple change-management activities and gives Brookdale control over corporate pricing processes, advances a value-based sales culture and maximizes long-term revenue,” he added.
Doug Vaughn, vice president of revenue management for Brookdale, said, “It's difficult to individually manage pricing for thousands of units across hundreds of communities.” As of March 31, Brookdale had approximately 1,052 communities in 47 states with the ability to serve a total of approximately 103,000 residents.
Under the new system, Vaughn added, the company's staff members can “focus their efforts on what prospects really want and need.”
Read more about Holiday's efforts here.