Arguably, the parking tariff for a car park is the primary driver for income and visitor numbers. Get both of these right and you have the magic formula for any car park, high visitor numbers and high income. Get it wrong and you have a full car park with people queuing to get in, but no profit, or an empty car park with a few rich people paying a ridiculous charge (read, most central London car parks…).
There are a number of measures that help us define a good tariff, such as the quality of car park on offer, security measures, cleanliness, customer services, but probably the most important are convenience and local competition.
The portfolio of car parks we own and manage span the entire UK and this means our tariffs vary greatly and have to be determined by all of the factors above. In some locations we have major shopping centres that are a huge draw, so as long as the services and quality of car park is right, we can be a little more flexible about the competition, but in other areas our car parks serve a town centre and are surrounded by competing car parks, so price is far more sensitive.
The problem we all currently face is a drop of car numbers as the public deal with massive price hikes in the running costs of cars and they are looking for alternative ways to get around. Overall our car parks are performing very well, but we have seen some significant drops in car numbers of up to 15% in some months.
The easy solution is to whack the price up and offset the loss of cars, and I’ve started to see this happen across the country from some of the bigger management companies, but I feel this is short sighted and only perpetuates the problem as more customers will start to leave as the price become too high. This type of model is unsustainable and if car numbers get too low, the only way to reverse the situation is to consider a large price drop, big marketing on the new tariff and hope people come back. Its not good business.
Here, we continue to work on making our car parks a quality operation that deliver exceptional customer services and somewhere that returns value to our customers. Our charges will remain competitive with the local area, but we also know that customers are happy to pay that bit extra if they feel their car is going to be kept safe and they can park in a nice area, so there is a pay off that we can capitalise on.
For a lot of our car parks, the price is far more sensitive than normal as the car park is a key function of the shopping centre it is linked with and it is essentially a support function of that business. If the car park wouldn’t succeed without the shopping centre then it must support that business. It would be easy to hike prices in a number of these successful locations, but we are a landlord first and foremost and visitor numbers are key.
I analyse a significant number of parking tariffs each year and look at the best ways to make changes and work out what potential this will have for us. To do this we must consider a host of data that will allow for accurate forecasts such as parking durations, tariff band analysis and car turnover. With each of these added to our Parking Analytics software we can make accurate assumptions on the financial impact to the business.
I understand that ultimately we are all in the game to make profit and this is the major driver for our business so we must look at clever ways to make the car parks profitable, whilst ensuring we don’t overstep the mark and alienate our customers. It’s a tricky game and something we all have to work hard on to keep ahead.
So keep an eye on those tariffs and watch for the competition, if someones prices are going out of control then maybe it would be worth a few quid to stick out some banners advertising your cheaper car park, or telling customers about the great services you offer such a breakdown cover, car wash or escort to car service.
And if I see banners going up near any of my car parks then I’m in trouble…