Point of View
One Man Did All This? Plus Casper and PIE
John Van Horn
I had breakfast the other day with a consultant and two of his staff, one of whom was the former head of the fraud squad at a major police department and the other who at one time ran the parking for one of the largest building owners in the U.S. The conversation was fascinating.
I posited that the parking business had changed considerably in the past 30 years, moving from operators who negotiated leases with building owners to the concept we see in most of the country (except perhaps the Northeast) where the operator is under contract on a month-to-month basis. (This change in how garages are operated has, many think, caused major problems with the business of owning and running parking operating companies. Income has gone down, and the business has become more and more cutthroat. Fees are so small that often operators can’t afford to properly staff and run the garages. They are forced down by building managers who think that paying the lowest price is best, and by operators who are willing to take the job for such small fees.)
One of my breakfast companions commented that this phenomenon may have been caused at least in part by one person, the then-head of the largest parking operator in the country. That was Monroe Carell and Central Parking.
It’s well-known that Carell’s goal was to be the biggest, and he strove to take over parking operations across the country and around the world. He called these new locations his company picked up “take-aways.” At one time, Central had more than 5,000 locations. Carell brought strong competition to the market, and reacted to the downward pressure on fees by focusing on contracts rather than leases. Other operators, to compete, had to lower their fees, and the rest is history.
It made some sense, but frankly there are other factors at work. Asset managers are also incentivized to lower costs and paid on how much they can keep down expenses. So they were quick to jump on board and sign contracts, some with incredibly low fees. (I know of one case in San Francisco where the operator, not Central, ran the garage for $1 a year and a piece of the action over a certain amount, and never hit that amount – but that’s another story.) The asset managers then thought they could browbeat the operator into a performance level that was impossible to achieve with the money available.
Of course, when you have such low fees and want to stay in business, you begin to look for ways to lower your costs, and the concept of charging for every piece of copy paper, having the garage manager run four garages in the neighborhood, and charging for FICA and SDI (even when the employees are over the payroll limit) becomes routine.
This lowballing also brings the sleazier side of our business out into the open. These “fly-by-night” operators are willing to “perform” for incredibly low prices, but then under-report income and don’t pay taxes, pay their staff in cash under the table, and pocket the difference. Legitimate operators find it difficult to compete in that environment and lose market share.
So whatcha think? Was this change in the parking business due to the influence of one person, or is there more to it than that? Let’s face it. Monroe Carell is an extremely successful parking operator. He provided good jobs for thousands over the years and ended up selling his company for hundreds of millions. He must have been doing something right.
One final comment sent in by a reader of my blog: “Good, Fast, Cheap – Pick two, you can’t have all three.”
Casper, WY, had a meeting of downtown merchants about parking, and I was pleasantly surprised to find someone who actually understood the problem. Dawn Stevenson, a Casper merchant, put it this way: “Part of the solution is for downtown businesses to fill a niche that customers want. You become a destination point because people like to shop with you.”
Yeah, that’s it! If you build it, they will come. Parking isn’t the problem; it’s part of the solution.
According to an article I read, Casper wants to redo its downtown area. What better way than to charge for parking and take the money and clean up the streetscape, install lighting, attract businesses and increase security?
They have taken the first step. Way to go, Casper.
The University of Wyoming has a problem. It’s a parking problem. They are studying the problem. They found that most students don’t buy parking permits. They park for free in surrounding neighborhoods. Bad students, bad.
They are considering a solution. Bus lines, bike racks, convenient transportation. Did they consider charging for parking? Charging in the neighborhoods around the school? You know the answer.
Will they spend millions on bus lines, bike racks, convenient transportation? You know the answer. Will the students ride the bus? You know the answer.
However, if on-street neighborhood parking costs more than on-campus permits, will the students consider the bus? You know this answer, too.
By the time you read this, we will be in the final planning stages for our Parking Industry Exhibition in Chicago. It’s going to begin March 30 at the Hyatt Regency, O’Hare. The venue has been newly renovated, the list of speakers is impressive, and Andy tells me that exhibitor sales are off the charts.
This is going to be a show you won’t want to miss. It’s informative, it’s intimate, and you will come away with the parking information you seek.
See you in Chicago.
Article Abstract from March, 2008