Once upon a time the phrase, “I’m at 100 percent occupancy in my facility,” was considered a huge accomplishment and something to be praised. If you were to claim that today, though, some eyebrows may be raised and you just may be in for a lecture. Having a full facility may no longer be the gold standard to measure success by. Today, operators are looking at multiple different metrics to determine the health of the business.
Let’s not get off topic, though, discussing what those measures are. Why is the 100 percent no longer the golden standard? How could having a full occupancy NOT be a good thing? In simple terms: You could be leaving money on the table. Sure, your units are rented, but at what rate? With the demand for self-storage being at an all time high, your cannot afford to not have a plan for revenue management in place.
Sometimes having an example is helpful. So lets talk about Mrs. Smith. She has been renting one of your 10-by-20 units for a couple of years. When you first met her, the two of you really connected and she pulled at your heart strings. But you haven’t raised her rental rate since she first signed on the dotted line. It’s clearly time for an increase! Do you have several tenants in the same situation? In the same unit for a few years, still paying the same? It is time for a rate increase!
There are many options for bringing in revenue while maintaining occupancy. Larger chains have algorithms that they can use that will adjust incoming customer rates along with their existing customers. You could do this on the anniversary of their lease. There really is no one-size-fits-all answer. You could try a couple of different approaches to see what fits best, but the most important thing that that you have some form of revenue-management plan that will help you to achieve the results that you want!
There will be times that you have raised the street rate and passed on rental increases and you are still at 100 percent physical occupancy. What do you do now? Add more units! If you have the land, capital, and demand you could do just that. Alternatively, you could add some portable storage units to your menu of offerings, especially if you don’t have the space to build.
The industry as a while has many rules that have been followed such as adhering to rate cards, aiming for 100 percent occupancy, and offering discounts. Now it is the time to throw out the old rule book! This is a new era and there are new rules. What matters right now is professional operators who offer the best customer service possible. Don’t offer discounts. That just cheapens your product. Instead, build yourself a solid revenue-management program that will give you the best and will offer your customer the service they need.