I had a broad ranging discussion the other night with SMC’s Mike Harley and his charming wife (and PTT Cover Girl) Mayra. Mike’s history is in the airline and auto rental business. He was musing as to why one couldn’t price parking space like you price rental cars, airline seats or hotel rooms.
He said that when he ran a rental car company, he had literally thousands of rates depending on the date, time, and most importantly the supply of cars available and the demand. He noted that here in LA on that evening, standard cars were going for $129 a day, while eight passenger vans were going at $29 a day. It was simple, they had only a few standard cars available, but a ton of vans.
Airline seats are priced the same way. I have noticed that prices vary depending on how long before the flight you book. If you book six months out it can be one price, but as time nears the price can go down, but if you wait too long it skyrockets. The airlines are experts at this. They factor in many things, but most have to do with how many seats are available and how many people want them.
What if a parking operator or an airport didn’t have a set price for parking spaces, but changed them based on availability and demand. I noted that a friend of mine who owns a lot across for Staples Center changes the price minute by minute on the nights that the Lakers Play. As the tip off gets closer, he looks at his lot and the traffic and raiser the price based on his experience and ‘gut’ feel. Sometimes the first spaces go for $20 and the last ones for $50.
Exactly, says Mike. If you reserve space in advance, you can secure a particular price, but if you drive up to the gate, the price might be considerably different, higher or lower. I noted the problem of communicating the price to the driver who ‘just drove up” and Mike and Mayra looked at each other and she said “variable signs.” The price could change hour by hour, minute by minute. Mike laughed. “If you don’t reserve in advance, you could be hit with some world class sticker shock.”
He noted that it may take parking operators in downtown areas a while to get on board with this idea, but that airport operations (both on and off) are looking at it with considerable interest. Mike predicts that airport parking operations could greatly increase their revenue by using this demand based pricing…without increasing the supply at all.
Parkwhiz is already testing this with their parking facility owner partners in Chicago. If you book a parking space in advance the prices are $5 for the first hour, and max out at $15 for up to 12 hours. The rates can be as high as $25 or $30 or more. This benefits the parker, and also the parking garage, as they can predict their occupancies in advance adjust their non reserved spaces accordingly.
If you think this is the future, consider that the future just might be here and Mike and Mayra and their super software to help you drive it could be already in place.
JVH
