In the UK this is commonplace. In Europe, USA & most of the rest of the world there is little Pre Booking activity. Is this because as a nation the british like to have everything reserved in the same way as we form orderly queues? Reality is no.
Pre booking of Car Park spaces at Airports came about because consumers in the UK found Car Parking prices at Airports very expensive. Airports believed that they were fair by charging more for their “On Airport” Car Parking than the average City Centre Car Park because of the convenience and proximity to the Terminal buildings. At the same time, competitors saw a huge gap in the market and started to open up Car Parks, “Off Airport” at a reduced rate.
Because the competitors had no visibility, they had to advertise these Car Parks online and in doing so started to take bookings online. Airports started to see their Car Parking revenue fall and to compete had to introduce their own Pre booking solution.
At the same time; along came the consolidator/aggregator, who also saw a gap in the market. They approached the Airlines, Travel agencies & Tour operators and became the one stop online shop for selling “Off Airport” Car Parks. Increasing further the competition and eroding Airport Car Parking revenue. Airport Commercial departments were starting to see their revenue drop like a stone.
Of course there will always be those consumers who will only park “On Airport”. It used to be the business traveller who could claim the cost as an expense and didn’t worry about the cost.
Recent research has shown that people booking Airport Car Parking space online are often unaware that they are booking “Off Airport” and so the challenge for airports was not that the competitors were cheaper but they were more visible.
Airports found that to restore their revenue that they either had to have their own online booking system, list their products with consolidator or both. Both happened.
consolidator don’t provide their service for free and a typical commission taken from selling parking spaces is North of 20%. So what UK Airport Commercial teams saw was firstly an erosion in their Car Parking revenue from Competitors and consolidator activity and then to stay in the revenue game, they had to give +20% commission to competitors for selling their Car Parks online.
I am not attacking consolidators in this article, they have very good, strong online channels and often their websites come up top of search. They have good closed user groups that they can offer to Airports (Large employers staff, Government agencies etc) and of course they have the Airlines. Book a flight or holiday and the Airline/Tour Operator site then patches you straight through to the consolidator for your Car Park booking.
So, in the UK. the world has changed forever. Airports have no option but to list their Car Park products with consolidators as well as on their own online website. In doing so, the consumer see’s a greater choice of Car Parks at and around the Airport. The Airport Car Parks will always be c 15% dearer and those consumers who are on a budget (most of us Today) the off Airport Car Park represents the best buy. Result. Lower revenue at a reduced margin.
So why should European Airports or in America, the great Roll Up nation be concerned?
This is why.
In Germany and Italy, UK consolidators have started to engage with “Off Airport” Car Park operators. US & European versions of the UK consolidators have started to spring up and Airlines want their passengers to be able to book their flights, Car Parks, Insurance, Car Rental & VIP Business Lounges all in the one shopping basket. It’s convenient, it adds value and it brings more revenue to the Airline who’s other margins are under pressure.
Is there a solution?
One Airport reading this article and rushing out to buy a Pre Booking System is not the answer (There are many, some good some average and some that don’t even exist until you say you need one, if you understand what I am saying?)
It requires Airports to consider a different way of working and doing business. Airports need to work together, they can have their own booking solution and share a portal with other Airports so that the Airport themselves become the consolidator.
It sounds like hard work and Airports who see themselves competing with one another talking and sharing a solution. It’s either that or throw margin away!
And in the UK, is it too late to change. is 20% worth grabbing back?
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You are right on the money Chris. Good post for all US parking entities to adhere to. Consumer driven market … adapt to change in this digital environment or face the consequences – lost market share!
On-campus land is usually at a premium for commercial developments which should generate better returns than parking. Access roads to many major airports run close to capacity. Instead of building additional on-campus parking, perhaps airports should aggressively enter the off-airport market.
The multiple benefits include reduced access road loading, maintaining on-campus parking rates at a premium and release of land previously earmarked for parking to commercial development. Off-airport build cost per bay will be significantly less than on-airport structures, so returns per buck invested will be greater. Win-win. Unless you are an off-airport operator.
Noel
In the UK there are 2 reasons why Airports do not traditionally build off Airport
1. Local authorities don’t want the airports to spread their footprint any further and in doing so increase usage of local roads.
2. If you extend parking to an off airport location you devalue the product as it has less convenience value.
My post refers mainly to Pre-booking and by understanding your passenger better through online statistics, you can increase revenue and optimise your existing “On Airport” space.
In many Airports, space is only constrained for 4 to 5 weeks a year and this is not a great reason for building more parking to stand empty for 48 further weeks.
It is better to maximise your revenue not just in peak weeks but all year and having a good online presense with a sophisticated Pre booking system, coupled with revenue management will achieve this.
Remember that adding additional spaces, particularly remote space, doesn’t just add operational cost but bussing costs and environmental impact