The underlying principal of Revenue Management (RM), also known as Yield Management (YM), is to sell the right product to the right customer at the right time and price.
RM techniques have most commonly been adopted in the airline and hotel industries. It is only recently that they have been adopted by the parking industry where the idea is to sell the right parking space to the right driver at the right time and for the right price.
The rise in the number of digitalized services in the parking industry has encouraged players to become more agile regarding their pricing policy and adopt such techniques, transposing them from other sectors.
However, one of the major particularities of car park revenue maximization lies in the fact than an hour of stay for the same parking spot can be priced at very different prices depending on the length of stay of the vehicles that will occupy the spot (the shorter the stay, the higher the rate per hour).
This is not true for an airline seat and less true in the hotel sector.
That is why it has often been observed that incorrect pathways are chosen to achieve parking revenue optimization.
The two major pitfalls are:
- Implementation of a variable pricing solution instead of a dynamic pricing solution
- Opting for a dynamic pricing solution but basing core optimization upon car park occupancy
Kowee describes in this document the common ways in which car park revenues can be diluted with the use of classical RM practices. The white paper gives examples of the common pitfalls and also shows how parking revenue optimization is more complex than simply relating prices to forecasted occupancy levels.