Economy Sparks New, Targeted Revenue-Producing Products at MSP
By Richard Decker
As with hospitals, downtowns, universities and theme parks, parking is a major revenue source for Minneapolis-St. Paul International Airport (MSP). In fact, it is the largest single source. So when we in parking sneeze, the organization feels bad all over. It looks to us not only to recover quickly, but also to help it get healthy, and quickly, too. Does this sound familiar?
During the fall, winter and spring of 2008-9, MSP experienced the full brunt of a slowing economy. The Twin Cities are home to many national business’ headquarters, so between 65% and 75% of our passengers are frequent business travelers. Average stays are three days, more than twice a month.
When businesses cut back, they cut their business travel hard. When the economy slowed in late September 2008, our revenue projections were on track and our expenses were below budget. All this changed very quickly and dramatically.
Fortunately, we had just proposed a 12.5% ($2/day on a $16 daily rate) rate increase early that fall. It was approved and became effective Jan. 1, 2009. In spite of this, January 2009 sales were 9.4% below those of January 2008. We had fewer customers, and they were parking with us less often.
Along with Arlie Johnson and Jeff Courteau, I had to quickly create products to retain existing customers and attract others away from our competitors. Our customers were reevaluating all their purchases. We had to understand and then meet the new values. We then had to convince them that MSP parking remained a superior value for their parking dollars.
Our 23,000 spaces compete directly with 6,000 spaces controlled by four off-site operators. Their shuttle systems connect with MSP from their, usually, surface parking lots. We also compete heavily with passengers being dropped off and picked up (via cellphone) by friends. We have limousine companies, taxis and a SuperShuttle franchise just to keep it interesting.
We had to appeal to those trying to spend money wisely in the new “normal” economy. We identified which parking benefits they would most value as they made their choice of where (or whether) to park. We needed to differentiate our services from those of our competitors’.
We identified total value as a theme when money matters. We needed to communicate that our total value – in terms of dollars, time, stress level and convenience – was actually greater than that offered by competitors.
We highlighted that parking at the airport was not a luxury: It was a wise choice, and we developed a new parking product to drive that message home. We emphasized that the airport had no shuttle to wait for (both ways); that covered parking saved them time (cleaning off the ice and snow) and protected their vehicle; there was no added cost of tipping the shuttle driver; they could conveniently set their own schedule by driving themselves; and they didn’t need to wait in the cold for a friend to pick them up.
We also had to locate this new parking product where customers could dependably and quickly find a space and just relax as they headed for their terminal. We wanted customers to recognize that their needs would be met at a price that was lower than other airport alternatives and lower than our competition.
We had just added 4,500 spaces to the existing 4,500 at the Humphrey Terminal next to the light-rail station. This train connects the Humphrey Terminal with the Lindbergh Terminal (a three-minute underground ride!) every eight minutes. This ramp provides our customers a single, easy to find location with easy access to both terminals. It is lower priced by $4/day and is currently underused.
Understanding the increased consumer interest in value, we created MSP Value Parking to appeal to the value-conscious customer. This is the business traveler whose travel budget was reduced or the leisure traveler for whom this is an out-of-pocket expense. Value parking is very different from cheap parking (far away or in an undesirable area) or economy (definitely far away). It speaks to parking that meets the customer’s most important needs at a competitive price.
We communicated the benefits of MSP Value Parking via billboards on important travel routes and on drive-time radio, as well as on in-terminal pole wraps, wall wraps and electronic billboards. We reminded our customers to drive toward MSP Value Parking on inbound roadway signs and labeled the entrance lanes with a full color, overhead variable message sign.
The MSP Value Parking areas receive many more vehicles than before our launch of this program. This better uses our inventory and meets the needs of our customers. At year end for 2009, and despite a 5% drop in passengers, for a variety of reasons we were only 1.3% under our revenue budget. One reason was the success of MSP Value Parking.
In March 2010, we expect to launch eParkElite, an exclusive, AVI-accessed reserve parking area next to our front door to meet the needs of our business travelers who want to know that a parking space will be available every time they fly.
For the past several years, our parking inventory at Lindbergh Terminal has fallen short of demand weekly during peak spring and fall travel seasons. As a result, customers have had to drive to the Humphrey Terminal to park and return on light-rail transit. This added 30 minutes to their time to the airplane and much to their stress level.
We had to find a bulletproof method and a close-in location to meet their needs and to add revenue. We wanted a location for which customers could park nearly next to the Lindbergh Terminal or the Humphrey Terminal, with an entrance/exit that avoids congestion and delays; effortlessly enter and exit; document this travel expense; and pay a reasonable price. If the device could be shared within a company, its value to them would improve.
We knew that eParkElite had to work every time so our customers were not delayed or stressed. Additionally, if the tag were passed to an infrequent user, how could they place it inside the car correctly each time? A windshield mount was not practical. After testing several other locations, we found that a tag with a non-slip surface placed in the middle of the dashboard worked.
We placed these instructions on the face of the tag so all users could locate them easily. Also, if a tag does not work, customers may press an intercom button at the gate. A 24/7 staff member can help them easily since they can see our customer on a fixed camera at each gate.
We also had to direct these frequent users and their infrequent-using office mates to the eParkElite entrance lanes the first time they used it. As our ePark logo is so recognized, we had to be sure our regular eParkers did not arrive at this entrance and expect to park! We have placed our new, eParkElite logo on the inbound roadway overhead signs as “bread crumbs to follow” to the correct area. (Only our eParkElite customers will know what this logo means.)
We altered part of our parking areas at both terminal locations so that customers with an AVI device could always enter and exit these areas. This alteration allows us to quickly expand or contract the number of spaces available with simple concrete Jersey barriers.
Those spaces not segregated for eParkElite customers are available to regular short-term parkers. We can thus maximize our inventory usage for two sets of customers. We expect to flex these areas based on the season (fewer business travelers in summer and the fall holidays) and on eParkElite demand as this program grows.
We welcome questions or visits from parking professionals interested in MSP Value Parking or eParkElite. They are great ways to meet both customers’ needs in the new “normal” economy and our need to keep our revenues healthy.
Richard Decker, Assistant Manager of Parking Operations at Minneapolis-St. Paul International Airport, can be reached at firstname.lastname@example.org.
Article Abstract from April, 2010