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Student Housing Developers Vary Price Points to Boost Occupancy
Jennifer Popovec / MULTIFAMILY EXECUTIVE / July 17, 2013
Student housing pros heed a lesson from their hospitality counterparts: Variety breeds customers.
Student housing owners are embracing a strategy that hospitality companies have implemented successfully for years: operating multiple properties in a single market to appeal to more customers.
Consider Hilton Worldwide: The company often operates several properties under various brands, also known as flags, to attract a wide range of guests. It segments its customers by price point and the type of travel, business or personal.
Hilton’s Homewood Suites brand, for example, appeals to business travelers who spend several nights or weeks on the road. In contrast, its Hilton-flagged properties appeal to more upscale travelers, both business and leisure, who are looking for on-site amenities such as a restaurant.
In the student housing industry, a number of owners are building portfolios that will appeal to a wide range of residents too. They’re differentiating their properties by design and lease rates, as well as academic standing (underclassmen versus upperclassmen and graduate students).
“The idea of product differentiation is fairly common across many real estate sectors, hospitality in particular, and, now, student housing companies are doing it,” says Miles Orth, executive vice president and COO at Philadelphia-based Campus Apartments. “There are a number of markets where it makes a lot of sense.”
Expectations Vary Among Students
Like hospitality companies before them, student housing owners have recognized that not all their customers are the same. Their residents certainly have one thing in common, however—they’re all students. But beyond that, each one has different priorities and expectations, Orth notes.
Those priorities and expectations could be as simple as having a private bathroom or a resort-style pool. Student housing owners that operate a property without such features may have trouble attracting residents who want them.