The future of the $100 billion parking industry
The 2014 Consumer Electronics Show featured the auto-industry like no other CES before it. From self-driving vehicles to digital interiors, the promise of a “connected car” is surely getting closer. Largely missing from the announcements, however, was how parking is being improved for drivers. Innovative parking models have been written about for years, but those models have never fully materialized.This is about to change. According to new analysis by Frost & Sullivan, the $100 billion worldwide parking industry is expected to attract $200-$250 million of strategic investment over the next 3–5 years. The lion’s share of this capital will go to improve inefficiencies in the ways that we currently park.
The parking industry’s long road to innovation
The parking industry has long been segmented into two types: on-street parking and off-street parking. On-street parking (i.e. parking meters), represents about one-third of all parking-related revenue in the US and is typically controlled by cities and municipalities. There has been some progress on-street within the realm of mobile payments and way-finding initiatives, but no truly scalable parking innovation has yet occurred in this segment.
Off-street parking (i.e. garages and surface lots), which represents about two-thirds of all parking-related revenue in the US, is largely owned by private enterprise and therefore, theoretically, should be faster moving when it comes to innovation. But even this segment of parking has been slow to change, mostly because a) off-street parking is a multi-layered ecosystem with many different players and b) consumers typically delay parking purchasing decisions, usually looking for parking after they reach their destination.
In the US, there are more than 40,000 garages and surface parking lots. Owners of these facilities rarely manage them, instead relying on parking operators and equipment providers (that provide access and revenue control solutions) to maximize parking revenue. The result is a web of gatekeepers that control the parking supply regionally.
Consumer behavior is another reason that the parking industry has not fully innovated. According to a 2011 IBM survey, drivers globally spend an average of nearly 20 minutes per trip in pursuit of a parking space. Despite this colossal waste of time, the concept of pre-booking parking prior to arriving at a destination is still nascent. Most people continue to drive around searching for a spot, either on-street or off-street, typically unaware of what parking inventory is available to them. In a perfect world, they would not only know what spots are available at any given time, but also be able to compare the price, location and amenities of those available spots, to find the one that suits them best.
The emergence of the online parking marketplace
Despite these challenges, there are a few types of parking where innovative models have begun to emerge. One is “event parking”, or securing a space that is tied to a particular pre-planned activity with a known start and end time, like a sporting event or theater performance. This type of parking activity now happens online, ahead of time via an e-Parking marketplace like ParkWhiz.com or ParkingPanda.com. Another type is “airport parking,” an instance when a driver also fully knows the parameters of his or her parking duration.
These types of pre-booked parking events make sense for the driver, who gets cost certainty and the benefit of guaranteeing a parking space amid a potentially stressful trip (nobody wants to miss a flight or the first quarter of an NFL game looking for parking). But they also make sense for event parking operators, many of whom open solely to supply parking for those events. These suppliers can premium price their guaranteed spots and improve their asset utilization without interfering with any regular drive-up customers.
Historically, daily and monthly off-street parking, which make up nearly half of all parking revenue in the US, have been left out of the pre-booking game. However, this type of parking transaction is becoming a much larger part of the online marketplace, with the growth of smartphone usage. Drivers may still not be thinking about parking before embarking on their trip, but their mobile devices can now provide on-street and off-street parking inventory availability and pricing to them in real-time as they reach their destinations.
The expansion of daily parking within the online marketplace will likely continue as more everyday off-street garages and lots come online. Another factor that should aid expansion of this type of pre-booking is the ability for the garages to accept mobile parking passes, the kinds that live on your smartphone until you arrive at the garage, and open the access control gate. And of course, the promise of a “connected car,” which makes these kinds of parking decisions for you – finding an open on-street spot or purchasing an off-street spot optimally and entering and exiting you from the garage without any friction, should expand this marketplace even further. Experts believe we’ll see those types of cars beginning with some 2015 models.
What is the future of parking?
Over the next few years, parking will undergo a shift that will be a tipping point for the industry. Some of the changes we may see include a single source solution that combines off-street and on-street parking availability at the time you need it. Or it may include urban mobility solutions that will focus on getting consumers from point A to point B to point C, whether that involves taking a car, public transit, biking, or walking. Parking facilities will also integrate relatively low-cost technology solutions to streamline and better the customer experience through the smartphone and the connected car. Lastly, demand-based pricing will become a tenet to parking, maximizing revenue by matching driver to the right space at the right time at the right facility.
Parking innovations may have been a long time in coming, but the future of improved parking is definitely upon us. It should be an exciting ride.
[Image Credit: Wikimedia]