Price it Right – Maximize Your Airport Car Park Revenues

The airlines used to do airport car parking revenue management manually, they’ve moved on and made money, they have the same customers as you, why don’t you?

No-one today questions that passengers flying from an airport past a vast range of prices, and not just depending on the destination they are flying to.
Within a single departing aircraft, passengers will have paid different fares depending on:

• when they booked,
• how long they will be away for,
• how close to the front of the plane they are sitting,
• the size of their seat,
• whether they are travelling alone or in a group,
• whether their journey keeps them away over a weekend,
• Did they pay for any ‘extras’ like fast-track, or insurance, or lounge access?

And for the same aircraft, the mix of fares paid between e.g. a Monday departure and a Thursday departure will vary considerably as the journey purpose mix changes. Indeed, it is common for airlines to swap aircraft types or cabin configurations on the same service depending on day or week or time of year to reflect changing demand.

The airlines have invested in in-house or 3rd party software to record historic transactions (booking date, travel date, channel, price etc.) at a segmentation level which lets them dynamically price future seats based on history, rule and parameters and a close study of booking pace. Pricing smarter is recognized as far more beneficial than cost saving, as a way of growing overall business growth.

With the airlines having been long term adaptors of the art and science of revenue management, is it any wonder that airports are catching on and catching up given they have the same customers? They both have perishable assets (seats or spaces) and a segment able client base each with their own journey purpose.

What options are available to the airport?
Car Park booking engines generally offer a rudimentary pricing capability, increasing price as occupancy thresholds are reached, applying booking limits to stop sales and enabling promotional discounts to be applied.
However, these are not scientifically applied, e.g. if 50% of sales are sold 2 weeks in advance this suggests far higher demand than if they were sold 2 days in advance but the booking engine would apply the same step change in price. In reality, prices should probably have been higher earlier in the former case, and probably should be lower in the latter case. And when to stop sales is based on a guesstimate of how many un-booked cars will be in the car park, an estimate which is probably too cautious and infrequently updated.
Similarly, the attentive manager will probably manually apply overrides to the next few dates as these become the focus of attention, although the opportunity to exploit demand is generally lost by then. And this process relies on having good reports often requiring expensive development or a lot of time and skill in Excel or similar.

This is where the airlines were in the 1980s. Dedicated individuals using what data they had to make short term decisions.
But now there are huge potential benefits for airports to go down the automated airport car parking revenue management route, using technologies and methods established in air transport and similar fields

• The building block is finely tuned demand forecasts of arrivals broken down by time of day, car park, product, market segment and duration of stay
• These forecasts predict the peaks and gaps in space availability enabling prices to be selected which maximize revenue to the airport
• Nightly price optimization
• Selecting the best length of stay controls (not blocking valuable spaces with cars on discounted longer stays)
• Accurate prediction of drive ups means that bookable spaces aren’t turned off too-early (potential revenue split) or too-late (customer service failures)
• An automated solution is setting and modifying prices months into the future, not just days
• Re-allocating demand between car parks as space becomes scarce
• Exception reporting tells the users where recommended prices are being changed rapidly, prompting review of forecasts and/or available prices.
• Deep BI enables the user to see all their KPIs, split by car park, product and channel. Rather than removing running the business from the user, the system is empowering the user with a battery of information. The car park manager has never been better informed on what has happened and what will happen.

What does a typical revenue management product look like?
The GrayMatter’s Car Park Revenue Management (CPRM) product is a good illustration of a demand-driven dynamic car park pricing engine. CPRM predicts and recommends predict and recommends future price every day for few days ahead based on historical data analytics, algorithms and business rules. Airport Car Parking Revenue Management (CPRM) not only recommends and applies optimal pricing but also provides critical data-driven insights to maximize revenue and management control, for both pre-bookings and drive-ups. Here are some example showing

• Booking Pace (how do sales compare with this time last year)
• How many arrivals do we forecast?
• How accurate are our forecasts?
• Where is the system making price changes?

Book a Free Demonstration of GrayMatter’s CPRM Product!!

As well as the suite of information through the BI, at a quality exceeding costly inhouse developments GrayMatter’s Car Parking Revenue Management (CPRM) provides clear revenue gains.
There are likely to be in the scale of:

Depending on the airport a total revenue gain of circa 8%. An airport with USD 5m in turnover will achieve full ROI in year one including implementation costs. If you still aren’t sure, invite our Solution Consultants to do an appraisal of the potential benefits at your airport. You have much to gain and nothing to lose.

About the Author of this Blog: Mark is a senior revenue management professional and the founder of Parking Revenue Solutions. As a consultant he has helped design, develop and implement GrayMatter’s Car Park Revenue Management Solution