PT The Auditor
Lot Full – Not Really
My experience has told me that one of the biggest issues in bottom-line loss in garages is not in the daily receipts but in the monthly or contract parkers.
I strolled into a garage office in a major Midwestern city recently and there was a memo from the manager to the staff:
“We are full – please sell no more monthly permits.”
Many questions immediately came to mind.
How do you know the garage is full? How many people are on the waiting list? Do you know what the physical occupancy is at various hours during the day? How many people do not renew their permits each month? Are you selling permits based on 24-hour usage, or do you sell permits based on when the customers need to park?
The answers were typical. The manager knew the garage was full because he knew about how many daily parkers he had each day, how many monthly permits he had sold, and how many spaces there were in the garage. Add the first two together and compare it with the third, and there you have it.
Well, no, not really. First of all, there is this thing in garages called “turnover.” That is, how many people aren’t there at any given time for whatever reason. People take vacations, are sick, have to make sales calls, are in the office only three days a week, etc. Therefore, the actual number of monthlies you have sold isn’t as important as the number of monthlies that are in the garage at any one time.
Most good revenue control systems can give you a spreadsheet of just that information. How many are in at midnight, 8 a.m., noon, 6 p.m., etc. What if, when you looked at that information, you found that the garage was never full. There was always about 10% vacancy in this 1,000-car garage. At a minimum, that would tell you that you could sell at least 100 more monthlies. And at $300 a month, that’s $360,000 that isn’t going to the bottom line.
What about non-renewals? In most garages, the monthly parkers are “month to month.” If you have 800 monthly parkers, the chances are that in any given month, what, 50 or so, won’t renew. Perhaps they moved, changed jobs or found a better place to park. It’s easy to figure out the average. Just go back for the past year and check to see just how many didn’t renew each month and pull the average. (If you don’t know how to pull an average, as “The Donald” would say, you’re fired.)
Let’s say the number of non-renewals each month averages out at 40. Then one could assume that you could sell an additional 40 spaces each month (in addition to the numbers above), because you know that 40 folks aren’t going to show up every month.
What about shift work? Depending on the area your garage serves, this can make a huge difference in the number of monthlies one sells.
Years ago I audited a hospital in New York. It was a big place and had a number of garages. They were in the process of justifying another garage. They had 1,200 people who needed to park, but only 600 available spaces. What to do, what to do?
It took me six months of heavy selling to convince them they didn’t need another garage, but they did need a bit of creative selling with their monthly parking.
It’s like this: Staff in hospitals (doctors, nurses, support personnel) work strange hours. Few work a “normal” 8-5 shift. Operating rooms are active at all hours, the emergency room is open 24/7 floor nurses work three shifts, some work three 12-hour shifts on, four days off and so forth.
With a bit of creative card issuance and a system that allows for control of cards by time and day (most do, and if they don’t, they should), you can assign a lot of people to a relatively small garage. In this case, we were able to assign more than 1,300 people to the little over 600-space garage and there was always space for them.
This was made easier because this was a monthlies-only garage and had no daily parkers.
But what about your typical garage? If you look at it, most of the time it’s empty. It may fill completely during the day, but what about nights, holidays and weekends? You could fire cannons through the place.
Why not market that time to people who live in the surrounding areas. Many may work on the other side of town and need to park only between 5 p.m. and 8 a.m. and on weekends. There are systems that track those cars and turn them into daily parkers if they stay over their allotted time. You can invoice them for the additional time.
Of course, take a look at local hotels and restaurants that have valet services. Most are used only at night. Here’s a great way to increase your revenue and “sell” that unused space.
Take the time to realize what “lot full” really means. I know someone that kept selling monthlies forever. It was like creating a vacuum, you never really “fill,” but there are always a few spaces that are empty. It depends on the demographics of your garage population.
Article Abstract from October, 2008