The Future of the $100 Billion Parking Industry
Rumors of its death have been greatly exaggerated ...
According to a recent analysis by Frost & Sullivan, the $100 billion worldwide parking industry is expected to attract institutional and strategic investments to the tune of $200 million to $250 million over the next three to five years, mostly to spur innovation and smarter parking. A big reason for this infusion of capital is to remedy the inefficiencies in the ways that we park, per recent findings.
So why has the parking industry
taken so long to innovate?
Until recently, parking and innovation have mixed like water and oil. This is largely due to the slow-changing nature of the two-headed parking industry, which comprises both on-street and off-street parking.
On-street parking (i.e., parking meters), which represents about one-third of all parking-related revenue in the U.S., is typically controlled by cities and municipalities (see Figure 1). These folks are not the fastest moving when it comes to initiating technical change, and while there has been progress within the realm of mobile payments at meters, truly scalable, innovative parking availability projects that help drivers find spots when they need them are few and far between.
Off-street parking (i.e., garages and surface lots), which represents about two-thirds of all parking-related revenue in the U.S., 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.
Revenue in Billions
In the U.S., there are more than 40,000 garages and surface parking lots. The owners of these properties range from commercial real estate developers to REITs and even some cities. Most of these asset owners rely on parking operators and equipment providers (that provide access and revenue control solutions) to manage their properties and maximize parking revenue.
The result is a web of gatekeepers that control the parking supply regionally and often have conflicting objectives (even in regard to the very asset owners that they represent). In this environment, entrepreneurs attempting to put forth elegant solutions to disrupt parking are required to create harmony with each sell-side entity, which is no easy task (see Figure 2).
Consumer behavior is another reason that the parking industry has not yet tipped. 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 before arriving at a destination is still nascent.
Most people continue to drive around searching for a spot, either on- or off-street, typically unaware of what parking inventory is available to them (see Figure 3). 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
Parking is an inherently transient activity in which most drivers don’t think about parking until they’re in their vehicles headed to their destinations. However, a few types of parking do seem to have tipped with regard to pre-planning and pre-booking.
One type is “event parking,” or securing a space that is tied to a particular pre-planned activity with known start and end time, like a sporting event or theater performance. This type of parking activity now happens whether the parking space is at the actual venue itself, or simply nearby. Another 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. But they also make sense for event parking operators, many of whom open solely to supply parking for those events. They 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 makes up nearly half of all parking revenue in the U.S., has 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.
Another factor that should aid expansion of this type of pre-booking is garages being able 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 – purchasing optimally and entering and exiting you from the garage without any friction – should expand this marketplace even further. Experts believe we’ll see these types of vehicles beginning with some 2015 models.
So, who is leading the
In the early days, my company, ParkWhiz, focused on event parking, and was able to build its business by signing parking locations around major venues and getting distribution through ticket sellers such as StubHub and TicketsNow. Now, however, the company is seeing the most growth from daily transient parking events, a trend enabled by increased mobile usage, but also by its nationwide footprint and its integrations with the world’s largest PARC system providers.
Of course, ParkWhiz is not alone in its quest to “disrupt” off-street parking, facing direct competition in a few markets from SpotHero and Parking Panda, for example. Also, several companies, including Best Parking, ParkMe and Parkopedia, are focused on data aggregation, creating databases of facilities that include hours of operation, rate structures, entry and exit points.
Lastly, a handful of companies are focused on solving on-street parking. Creating the “right” solution may require a significant capital investment to support the infrastructure and sales process to successfully integrate at scale. Despite this challenge, several companies have surfaced as potential “disruptors,” including Streetline Networks, QuickPay and Parkmobile.
What is the future of parking?
Just a few years ago, tradeshow themes focused on proper lighting and garage liability. Today, the themes revolve around innovation and technology. In fact, this month in Chicago, the Parking Industry Exhibition 2014 (themed “The Future of Parking, Today”) will be dedicated to technology and its effect on the industry.
Over the next few years, parking also will undergo a shift that will be a tipping point for the industry. Some changes we might see include a single-source solution combining off- and on-street parking availability at the time you need it. Or urban mobility solutions focused on getting consumers from point A to point B to point C, whether that involves driving a car, taking public transit, biking or walking.
Parking facilities also will integrate relatively low-cost technology solutions to streamline and better the customer experience through the smartphone and the “connected” car. And 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.
So is parking dead? Far from it. It’s just getting started.
Contact Aashish Dalal, CEO of ParkWhiz. at