Marketing - Who is responsible?
February, 2006I was auditing a garage in the mid-South a few months ago. From the outside, it was seemingly well run. There were few problems I could see. The reports were accurate, the monies banked on time, all the numbers added up.
Then I noticed there were about 200 empty spaces on the top floor of the garage. When I asked the manager, he said, "Well, they might fill some days." I was standing near the front counter when someone came in and asked for a parking space. He was told the garage didn't have any room and he would be put on a waiting list. When I checked, I found the waiting list had 300 names on it.
As far as I could see, the operator was making no effort to sell those 200 empty spaces. The reports going back six months said that the 1,150-space garage had never had more than 900 cars in it at any one time. However, the answer was that they kept 400 spaces for dailies and had sold 825 monthlies. That's a 10% oversell. They didn't want to "risk" not having a place for people to park.
Frankly, I thought this was as big a problem as having fingers in the till. Big money was being lost, and it was bottom line money.
In this case, the operator was remiss in his responsibility. The garage was proven to have plenty of spaces available. It was never full, and reports showed that it had at a minimum 200 extra spots that could be sold. I think, of course, that one could sell more than the 200 -- probably closer to 300 -- since parking lots are much like vacuums: You seldom if ever get to completely full. If you add 200, only 175 will show up at any one time. If you add 250, only about 200 will show up, etc. etc. etc.
Also, the garage has a 400-car buffer -- the daily spots. (For all we know, they may need only 300 dailies.) The records show that they sell about 1,000 daily tickets on average, but how many of them are "in" at any one time? A good revenue control system can give you that info in seconds, or you can take a day's worth of tickets, enter them in a spread sheet, and get that info in a few hours.
Assuming that they could sell 300 more monthlies (the number on the waiting list) and the cost is $200 each, the total revenue gained (or, in this case, lost since they weren't selling them) would be $720,000 a year, or a loss of nearly $1.5 million off the bottom line for the two years this operator had been on the site.
And what about marketing the garage when it's empty? One can sell "24 hour" permits, but we know that many of the parkers are there only during the day. Why not sell permits that work only "after 5:30 p.m." and on weekends? There are software programs that track these permits, and if a person is "in" the garage before 5:30 p.m. or after 8 a.m., they are charged the full daily rate, which must be paid before they can exit the garage. These permits could be sold to people living in the area who work elsewhere and need parking only in the evenings and on weekends and holidays.
Other marketing ideas include working with customers who have mobile employees, such as tech reps or salespeople, who need to be in the garage for only a few hours a day. They can be charged just for the time they use. Once again, there is software that handles that. The list is endless.
My tendency in these situations is to recommend a change. For its fee, the operator has more responsibility than just training and supplying attendants and keeping the facility clean and well run. It also has a responsibility to market the garage's product, and that product is space.
In this case, the garage manager was put by his company in a situation where he was extremely overworked. He handled all aspects of the business from hiring and firing to insurance, from marketing to maintenance, from supply clerk to accountant. He was running a multimillion-dollar business by himself.
When you hire an operator to run your garage, listen to their salespeople (usually their area manager or VP), but then ask to actually meet the people who will be handling the support for your garage back at their regional or national office. Be certain they exist, and also be certain they aren't so overworked they can't handle your business properly.
An operator tells you that they can run your garage efficiently because of economies of scale. They have an HR department, an accounting and auditing department, a maintenance department, and an insurance and claims group that you will share with their other customers and have the benefit of their expertiseand size.
Convince yourself they can do the entire job.