How Yield Management is Informing and Transforming the Parking Industry
Pricing in the parking industry has historically been an art not a science. The combination of nearby rates, experience based predictions and gut instinct came together to set pricing.
Put simply, a seasoned facility manager looks at neighbors’ rates and makes an assessment on what the rates at a facility should be based on past experience and instinct on what is coming in the neighborhood. This practice is highly subjective and often based on exceptions, but it is also very important.
Data plus Experience
Over the last 12 months, Colonial Parking® has been changing the way we approach rate changes to find a balance between experience, instinct and data and we think we have found it. Colonial’s Yield Management service utilizes historical data and occupancy to predict future trends and model the impact of potential new rate structures or price point changes at our locations. Erica Ireland, Manager of Pricing and Yield at Colonial Parking, explains “We review a client’s needs and extract data from on-site equipment. The extracted data provides a wealth of historical information on occupancy, duration and usage trends that are then paired with the competitive landscape to build a dynamic financial model. This model can show the impact of proposed changes in rates or pricing structures.”
Here experience takes over and we begin modeling new rate options with our field operating staff to provide calculated recommendations to our clients regarding changes that can benefit their facilities. Vice President and General Manager of Operations, Rich Rosenberger, explains, “The data is really aiding in driving important rate decisions. We made a relatively simple change at one location that had a huge impact on our revenue and we wouldn’t have gotten there if we didn’t have this type of analysis. Our Operations team has always relied on experience to set rates. It’s nice to now have another reference to not only validate our decisions, but also bring new ideas to the table.”
This process was recently used at an event-focused location downtown resulting in the removal of a specific rate band. This change netted approximately $30,000 in increased revenue each month. Of course, not every effort results in a win like this, but the small enhancements and changes we make each month add up.
Yield Management can also be used to implement dynamic pricing for surge events. For instance, in 2015 our Yield Management department worked directly with our Online Sales team to open normally closed locations for the Marine Corps Marathon and Expo. Dynamic, drive-up event pricing was implemented in order to maximize revenue for the race and expo, resulting in an extra $10,000 in drive-up sales across 7 locations during the weekend.
These efforts, however, are not all about revenue. They can also be used to enhance the customer experience. Colonial® recently ran a model for a Tysons location in which the client had two separate facilities in the same area. One of the locations was often full, while the other often empty. Utilizing historical data and strategic rates, our Yield Management team put together a plan to balance the occupancy, thereby creating a better parking experience for the customers.
Harnessing the amount of data we are using today is quite groundbreaking in the parking business. While there are services that currently exist within the parking industry to utilize a location’s data to forecast for the future, Colonial’s system combines data analytics with local, competitive knowledge to provide specific suggestions to make impactful changes; we feel the data is imperative, but experience and instinct is what transforms data into dollars.
About Colonial Parking: Colonial Parking manages 240 plus parking locations in the Washington, DC area. We are dedicated to providing exceptional service to both our customers and clients, as well as hiring trusted and driven employees that exude our integrity and accountability. We would be happy to review your project, be it large or small.