By evaluating certain key performance indicators, airports can maximize parking efficiency and revenues while improving the air travel experience
By Ryan MacLagan
One of the best ways for airports to increase revenue frequently involves thinking from the ground up rather than keeping their heads in the clouds. Regarding landside operations, parking represented approximately 37% of all non-aeronautical revenue generated within North American airports in 2021, according to the “Airport Economics 2023 Report” from the Airports Council International. Although this figure represents a significant portion of airport revenue, many operators have room for improvement, as the absence of modern parking technology infrastructure leaves money in the parking lot, so to speak.
When parking performs well, airports significantly boost their operating revenue. Tracking the right key performance indicator (KPI) or indicators enables airports to optimize potential parking revenue while better serving travelers. With proper access to revenue management technology, airports can glean valuable parking insights and automate demand-based dynamic pricing. These insights also point to the most critical KPIs in airport parking and can help adjust pricing strategies.
Revenue and occupancy
PHOTO COURTESY OF IDeaS
How full is your parking facility, and for how long, during a given time? These relatively simple figures represent the total occupancy of a parking facility and indicate how well the airport manages its parking capacity.
Tracking a parking facility’s total parking revenue during a given period helps airport executives better understand each parking location, its long-term success, and areas for improvement. Revenue figures also help marketing managers identify their most profitable periods and benchmark them against industry trends or averages. Most importantly, tracking revenue helps leaders understand the health of their parking business and whether it requires a strategic adjustment.
Revenue data provides valuable insight into optimizing airport parking earnings during low periods and identifying the trends that are most affecting traveler parking. These insights could include details regarding how new capacity, traffic or road construction shifts, rideshare rules, or new terminal openings influence parking behavior. However, revenue data shouldn’t be viewed in a vacuum: Other metrics should be monitored and layered in for additional context. For more insight, revenue figures must be paired with occupancy.
Unlike revenue, increasing occupancy does not automatically translate into more value over time — after all, you could charge nothing for parking and have some fantastic-looking occupancy figures. It’s also important to remember that due to the nature of parking, renting the same space out more than once in a single day is possible. As a result, occupancy can be a useful metric for gauging how well operators are filling spaces, but it can still paint an incomplete picture of revenue performance. To help fill in those gaps, airports must examine the value of parking spaces over time.
Average daily rate and average transaction volume
If airport parking facilities are experiencing high occupancy, could they fail to maximize their potential revenue? To answer this question, airports must examine their average daily rate (ADR), which considers the total time customers spend using a facility. Understanding a lot’s ADR helps parking managers set the right price based on supply and demand. Without it, airports may undercharge for spaces, or worse, overcharge and stifle valuable repeat business.
Conversely, an airport’s average transaction value (ATV) tracks the potential revenue of each transaction and weighs it against the number of customers served during a given period. Understanding ATV helps airport executives clarify the worth of each transaction, from short-term parking to long-term storage. It can help leaders shift parking to specific locations based on desirability and price, giving them greater control and flexibility over parking distribution.
ADR and ATV are invaluable figures for helping airports learn more about traveler parking behavior. These figures can assist operators in balancing the value of their spaces against their availability and inform decision-making as lots reach capacity. However, to understand an airport parking operation's actual overall value, looking at earnings per space is essential.
Revenue per available space
Perhaps the best overall metric for evaluating parking revenue performance, revenue per available space (RevPAS) helps airports determine the value of individual parking spaces over time. Rather than looking at customer behavior, RevPAS turns the spotlight on airports to discern their most valuable parking assets.
Heavily influenced by operator decision-making, RevPAS can rise or fall based on value over time. As a result, it is one of the most efficient means for operators to learn about their parking on a granular level and provides a strong overall indicator of how well a facility is maximizing the value of its parking space inventory.
Understanding RevPAS compared to occupancy and other KPIs provides a robust process for evaluating an airport’s parking success over time. ATV and ADR can be used to substantiate RevPAS data, and airports can use all three to learn the value of each parking spot, lot, and garage.
Tracking these KPIs and growing airport parking revenues require planning, a modern technology infrastructure, and a revenue management strategy. However, any airport can benefit from this approach. Travelers will welcome lower rates during slow periods and the ease and certainty of advanced booking. Both options help airports gain parking revenue that likely instead would have gone to rideshares or taxis. Meanwhile, airports will obtain the highest level of insight into their parking facilities while gaining more control over their parking footprint.
Considering these factors, airports stand to gain more than just improved earnings by adopting dynamic parking technology. Airports can use parking insights to identify developing trends and create reliable forecasts based on historic parking activity. Most importantly, airports can use these insights to improve the economic performance of their landside revenue-generating footprint and improve the air travel experience at the same time.
Ryan MacLagan is the director of account management for the car park division of IDeaS. He can be reached at ryan.maclagan@ideas.com.
