Partnership with Smarking: Data-driven Decision-making Drives Revenue Growth
Since September 2019, MGM Resorts International (MGM) has partnered with Smarking to implement Business Intelligence tools for its Las Vegas parking garages in order to optimize parking management and increase parking asset value. In January 2022, MGM engaged Smarking to identify opportunities to improve parking management and drive parking revenue growth at 7 of MGM’s parking garages on the Las Vegas Strip. The leadership team at MGM sought to increase parking revenue without sacrificing parking transaction volume, as the main source of income for MGM is not the parking garage, but the hotels and gaming.
“We make more money from operating our hotels than operating our parking. It was vital for us to not lose any parking volume while raising rates.”
Charles Berry-Vice President of Corporate Transportation and Parking Strategy, MGM
The leadership team at MGM was able to confidently raise rates at 7 of their parking garages without a decrease in transaction volume because
For parking facilities primarily serving transient parkers, Smarking’s Business Intelligence tool provides immediate feedback on all pricing and operating decisions. MGM was able to see the effects of the rate change within a few days of implementation
With Smarking’s Business Intelligence tool, the leadership team could identify that with the previous times they raised rates, there was not a decrease in parking volume.
The resorts they manage are tourist destination locations, and a slight change in rates would not drive away customers to a different parking location
MGM operates existing resorts with higher cost parking rates. The leadership team sought to unify all parking rates at all locations without losing parkers.
“We monitored our parking transactions with Smarking’s Business Intelligence tool and decided to test a rate hike. We were glad we could raise revenue without taking a hit to parking volume.”
Michael Timko-Director of Parking Operations and Strategy, MGM
On July 6th, 2022, MGM increased parking rates at 7 resorts - MGM Grand, Mandalay Bay, Park MGM, Mirage, New York-New York, Luxor, and Excalibur.
1 -4 Hours: Increased from $12/hour to $15/hour
4 - 24 Hours: Increased from $15/hour to $18/hour
With these price increases,
From April-June of 2022, MGM completed 1,047,254 parking transactions for $4,915,887, and from July-September MGM completed 1,058,780 parking transactions for $5,578,144 (Fig. 1). This represents an increase of $662,257 in quarterly revenue. $54,104 of the increase in revenue can be attributable to an increase in transaction volume, $608,153 can be attributable to the rate hike (Fig. 2).
Fig. 1 Total 2022 Q2 and Q3 transactions and revenue from 7 MGM parking garages
Fig 2. MGM Total Rate Change Impact from Q2 to Q3 2022
Fig. 3, Combined MGM self park revenue from the 7 garages April-September 2022.
Fig. 4, Combined MGM self park transactions from the 7 garages April-September 2022.
Furthermore, the July 6th rate change did not change the total parking occupancy rate across the 7 hotels. As shown in Fig. 5, the total occupancy rate remained approximately the same from Q2 through Q3.
Fig 5. Combined MGM self park occupancy from the 7 garages April-September 2022
Summary
The leadership team at MGM was able to increase the parking rates from $12-$15/hour and $15-$18/hour on July 6th, 2022 while gaining a modest 1.1% in parking transaction volume. This increase in parking rates achieved
$608,153 increase in parking revenue quarterly from the rate increase alone
$2.4M increase in annualized revenue
At a 3% cap rate, an $80M asset value appreciation on parking assets
“This rate increase was a success. We didn’t lose any parking transaction volume, while increasing our quarterly revenue by over $600,000. If it weren’t for Smarking’s Business Intelligence Platform, we couldn’t have gathered the same granular detail on transaction volume, and we would not have known if we were losing customers with this rate change.”
Charles Berry-Vice President of Corporate Transportation and Parking Strategy, MGM
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About Smarking
Smarking is a San Francisco based tech company serving commercial real estate owners, municipal governments, parking operators, and others to maximize business results for parking assets. Empowered by a team of MIT data scientists, urban mobility experts, Silicon Valley software engineers, and business professionals, Smarking’s market leading business intelligence and yield management software solution suite currently helps over 2,500+ parking locations in the USA and Canada maximize NOI optimization, tenant satisfaction, cost reduction, and enables data-driven parking policies.