Airport Parking Disruption Blog

Attention U.S. Airport Parking: It’s Time to Join the Disruption

By , Director, Account Management, Parking

The U.S. touts some of the busiest, fastest-growing and most advanced airports on the planet, yet their pricing approach is stuck in the 20th century. Most U.S. parking managers are limited by rudimentary and manual approaches to pricing, and travelers are faced with uncertain availability and a one-size-fits-all price to park. Not only does this create a less-than-ideal customer experience at parking facilities, but managers leave behind critical revenue at a time when airports must rely on non-aeronautical profits to invest for their futures.

One positive sign is that pre-booking systems are gaining traction in the U.S. the way they have in other parts of the world. U.S. travelers will soon be enabled to reserve a parking spot the same way they do for other elements of modern travel. But thinking a pre-booking system is the solution to today’s parking problem isn’t enough. Many parking facilities charge a set, long-term rate per day, no matter the level of demand for inventory. But is that parking revenue being maximized on busy or quiet days if the price is the same while demand dramatically differs? Are parking facilities giving customers the best deal or driving the best business performance by only accepting drive-up business at one rate structure?

By combining parking-reservation capabilities with a data-driven approach to revenue, parking managers can segment customer groups and sell the right product, at the right price, via the right channel, to the right customer, at the exact right time. Revenue management technology systems apply science to maximize revenue generated from a perishable product. And it works. By increasing focus on growing pre-booked parking business and applying revenue management practices, trailblazing airports around the world have applied a more strategic approach to pricing for more than 10 years—with great success. The concept took off, and it’s finally starting to make strides in the U.S.

Your Customers Are Ready for It

A common misconception with this approach is that pre-booked, discounted parking can dilute revenue from drive-up business. It’s an understandable concern, yet ultimately unfounded. Returns from pre-booking when using a revenue management system to price dynamically delivers revenue growth, and history has shown that travelers will quickly adapt. Many doubted this approach for hotels, but dynamic, demand-based pricing is commonplace today. And consider how quickly travelers accepted Uber’s controversial “surge” pricing. By embracing revenue management, parking managers can stimulate demand from travelers that may have never considered parking before. How? By leveraging data to target business or leisure customers with the optimal price depending on the day of week or other factors.

Parking presents one of the most profitable revenue sources for airports, but the future will present new challenges. Regulatory pressure and increased transportation options may ultimately pinch travel budgets and associated revenue-generating opportunities like parking. But with the number of airline passengers anticipated to nearly double over the next decade, moving quickly to optimize parking at U.S. airports is more important than ever. By defining a strategy now, airports can start to realize better revenue results quickly and secure this critical revenue stream as the volume of travelers increases, along with the need to re-invest in supporting infrastructure.

Many airports worldwide have already implemented revenue management technology to improve their performance, so now is the time for U.S. airports to take action. Pre-booking engines are a step in the right direction. But parking managers must also recognize the value of implementing a long-term revenue management strategy that uses untapped data to make decisions based on availability, demand and other real-time factors. If carried out correctly, this strategy will not only jumpstart new revenue growth, but it will also help build a stronger, more resilient business and improve the traveler experience.

Ryan MacLagan
Latest posts by Ryan MacLagan (see all)
Director, Account Management, Parking

As a former hotel general manager, Ryan brings a vast amount of travel industry expertise to his role at IDeaS. Ryan has provided direct client support and has helped develop key software features for IDeaS products, including group pricing and continuous pricing modules. Ryan enjoys applying his revenue management expertise to help companies achieve and exceed their revenue goals.

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