90% revenue losses while basic needs from citizens require accommodation - cities need to watch closely & plan ahead
Since the outbreak of COVID-19, the $131B parking industry has been hit hard (much like the hotel and airline industries), experiencing a drop of 50-70%+ commuter parking activity and 95%+ visitor revenue losses on a daily basis. While many parking businesses are under tremendous pressure to survive, municipalities across the nation are also facing unprecedented challenges.
Parking Revenue’s Importance To Municipalities
A little known fact is that municipality budgets heavily rely on parking related revenues, including both fees & fines from city owned on-street and off-street parking facilities as well as parking taxes from privately held parking businesses. Some examples:
Note the above figures don’t include Property Tax and Real Property Transfer Tax that applies to many privately owned parking sites and the buying/selling activities of such assets.
The importance of parking related revenues is even more significant for smaller municipalities, Henry Servin, Parking Manager at the City of Santa Monica, told Smarking that “parking contributes 30%+ revenue to Santa Monica’s General Fund every year”.
Using our own parking business intelligence and yield management software, we here at Smarking have been analyzing data from our municipal customers, while monitoring the health of over 2,000 parking facilities across the board. Our hope in publishing this data publicly is to help our industry better understand the impact of COVID-19 and, in turn, better plan for the near and medium term.
COVID-19 Impact: On-Street Parking
On-street parking activity in a random sample of 511 zones/blocks across the US (averaging 136 parking spaces/block) dropped 80%-90% since the National Emergency declaration on Friday March 13, 2020, a sign of social distancing in action.
Year-Over-Year (YOY) parking activity trends dramatically reversed course before and after the COVID-19 outbreak: going from a 10%+ YOY increase, to an 80-90% decrease compared to the same time period of last year. On-street parking revenue followed the same trend, indicating more severe changes than transactions.
Likewise, the daily peak occupancy of the 511 selected sample on-street parking zones across the country shows a very clear change of pattern before and after Friday, March 13th. Before, similar but slightly busier/higher daily peak occupancy in 2020 than in 2019. After, it dropped day by day all the way down to less than 10% of the total capacity, indicating a 80-90% demand loss.
The early signals can even be observed starting on Wed Mar 11th. Nevertheless, on-street parking continues to be utilized despite the current conditions.
Separately, the generally below 50% average daily peak occupancy of on-street parking does say a lot about the discrepancy between consumers' normal perception of “no parking is available” and the factually fairly under utilized infrastructure. The highly demanded downtown core on-street spaces and outskirts on-street parking spaces are clearly on the two polars of a very wide spectrum, telling us “demand-based pricing” is not just a “nice to have” for both congestion reduction and equity enablement.
COVID-19 Impact: Off-Street Parking
The operations of both city-owned and privately owned off-street parking seem to generally follow the similar trends. A collection of 935 sample off-street parking sites, including both privately owned and city owned sites, shows a similar trend as on-street parking: prior to the COVID-19 crisis: ~10% YOY increase, indicating positive growth in American businesses in general. Following March 13th 2020, in an accelerated manner, parking activities dropped rapidly by nearly 90%.
COVID-19 Impact: Takeaways
It is clear that:
Social distancing has happened rapidly in a week across the country indicated by both on-street and off-street parking activities.
Parking demand drop stabilized in about a week at -90% year-over-year comparisons in both parking activity and revenue, likely reflecting essential business workers/commuters still requiring functioning parking facilities, and citizens utilizing parking facilities for basic needs such as grocery and pharmacy etc.
Municipality parking revenue is being severely impacted along several vectors: a decline in parking taxes expected from private parking businesses, as well as declining fees and fines from city-owned on-street and off-street facilities.
COVID-19 Impact: Recommendations
For municipal parking professionals, it’s critical to keep in mind that parking should be an enabler of (and not an impediment) the world fighting the COVID-19 pandemic.
Moreover:
Unless it’s absolutely impossible to operate, parking facilities should remain open and functioning to support essential businesses and citizens’ basic needs;
Instead of using a cookie-cutter approach for all parking facilities, treat different sites differently. For example, the City of Santa Monica closed public access for three off-street parking sites near densely populated and high risk areas (ie. a public library, a major restaurant zone, and a senior care facility), while keeping monthly access parking facilities open for essential workers.
Create flexible parking policies to support citizens’ needs while continuing tight management and operations to both keep the facilities clean and help create social distancing. For example, the City of Santa Monica offered significant grace periods and waived all citation fines for extended stay at both on-street and off-street parking facilities. However, all meters, mobile payment, and PARCS are continuing to function to prevent vandalism and potential gatherings.
Pay attention to the potential revenue loss and recovery plan as early as possible. For example, the City of Long Beach built several financial models to understand the revenue impact in the new COVID-19 reality, including varying assumptions on a potential recovery curve, to understand the true impact throughout the remainder of 2020. The city also developed new parking policies to support citizens during the pandemic.
Track changes in your parking portfolio quantitatively on a daily basis - it’s “war” time - city officials and executives are making decisions on different levels in much shorter time frames, and requiring the most up-to-date information. For example, the City of Houston switched into a daily tracking mode since the beginning of the outbreak, and has been supporting the city’s need with all the parking KPIs and newest data available.
As we go forward, Smarking will be sure to keep you updated. At critical times like this, Smarking is standing with you and here for you. We launched a set of free professional services to help forecast revenue losses, replan for the year, as well as model recovery scenarios to support all industry peers. Please simply reach out to community@smarking.com and we’ll be sure to get in touch. We are confident that with our collective efforts, the coronavirus can be defeated, and will be defeated. Stay safe and well!
About Smarking
Smarking is a San Francisco based parking technology company enabling municipal governments, parking operators and commercial real estate owners to maximize the financial performance of their parking assets with enhanced data-driven parking policy making and management.
Smarking’s market leading Business Intelligence (BI) and Yield Management software currently empowers over 2,000 parking locations in the US and Canada, Smarking's newly launched Automated Yield Management dynamic pricing engine has generated 40%-400% online revenue uplifts for our customers’ parking locations.
Smarking is empowered by a world-class team of MIT data scientists, urban mobility experts, Silicon Valley software engineers, and business professionals.