Valet Parking Offers Attractive Revenue Creation

May 7, 2018
Airport valet parking offers new opportunities to improve the customer experience and increase revenues.

Parking is big business for airports as they continue to look toward generating more non-aeronautical revenue to stay in the black. Airports made $9.1 billion in non-aeronautical revenue in 2015 — and $3.7 billion of it came from parking and transportation, according to ACI-NA’s 2016 parking survey.

Breaking down the numbers for large, medium, small and non-hubs, it’s perfectly natural that the lion’s share of parking is split between short-term and long-term parking. But valet parking is also seen as an important part of the mix in the three larger airport categories.

ACI-NA does the parking survey every three to five years to help airport staff, consultants and others seeking to benchmark an airport’s parking operations. The 2016 survey reflects input from 17 U.S. large-hub, 15 U.S. medium-hub, 26 U.S. small-hub, and eight Canadian airports. Seventeen percent of the responding airports said they offered one or more premium parking products, including guaranteed spaces and reservations.

Bob Linehart is the COO of the airports division at Chattanooga, Tenn.-based Republic Parking, which oversees operations for 79 airports in North America. He feels valet parking has been on the rise for several reasons.

“Number one, the economy is in great shape, so people have more discretionary income to spend on more upscale services like valet parking,” said Linehart.

Second, people are more busy these days, said Linehart. “It’s a real benefit to be able to just drive up to the curb, leave your car and catch your flight,” he said. “And when you come back, your car is ready and waiting for you, so that’s a convenient thing.”

Republic Parking helps airports do surveys to see if valet parking is an amenity travelers want. “Valet parking doesn’t turn a profit in the first year, so it’s really an investment in customer service,” said Linehart. “If they choose to offer valet parking, we let airports know that it’s an investment for the first year and a half, costing around $200,000 in the first year.”

That’s a big investment, said Linehart. “But we feel that after valet parking has been around for between 18 and 24 months, it’s close to breaking even,” he said.

The ACI-NA parking survey broke down the average revenue per transaction by parking product type and it was no surprise that valet parking came out on top. The breakdown was: large hubs, $73.46; medium hubs, $54.72; small hubs, $127.36; and combined, $77.46.

What Airports are Doing

Milwaukee’s General Mitchell Airport made the decision this year to start offering valet parking. “We are committed to exploring value-added initiatives that will improve customer service and the parking experience at Milwaukee,” said spokeswoman Pat Rowe. “[We] believe valet parking will enhance the level of service options and optimize the overall general parking experience.”

The airport has 12,008 parking spaces, said Rowe. “The valet operation will have approximately 200 dedicated parking spaces initially, with the ability to expand based on growth and demand,” she said.

Valet parking will be located curbside on the south end of the terminal, said Rowe, at a maximum daily rate of $30. Services will include car washing and detailing, she added.

The airport’s ideal customer is the corporate traveler with a high value on time, said Rowe. “This customer is sensitive to the time spent looking for a parking space and values a high level of predictability during her or his arrival at and departure from [the airport],” she said.

George Bush Intercontinental Airport has 26,322 parking spaces, 873 of which are reserved for valet parking, said spokesman Bill Begley. “We think our customer is a person who has the resources to pay for a first class experience and is a frequent flyer,” he said. “But it can also be a person who is running very late for a flight they must make or a customer who needs luggage assistance.”

Valet parking customers enjoy luggage assistance, car washes/detailing, as well as a free USA Today newspaper and a free bottle of water, said Begley. “It also should be pointed out that at $26 per day, the rate is one of the most affordable among major U.S. airports and the lowest rate among the major airports in Texas,” he said.

Of its 13,275 parking spaces, Pittsburgh International Airport has 12 dedicated to valet — at $30 a day — in its short-term parking garage, with overflow as needed, said spokeswoman Alyson Walls.

“We see a range of business and leisure travelers utilizing this convenient service to save time when arriving at the airport or arrange for other vehicle services if needed,” she said.

For an additional cost, those using valet can get car washes, detailing packages, oil changes, inspections, fluid fills, gas ups, window and tire cleaning, said Walls, and more can be arranged.

Nashville International Airport has 1,045 valet parking spaces as part of its approximate total of 13,500, said Shannon Sumrall, the facility’s director of corporate communications. Valet parking costs $28 a day.

The airport partnered with Mercedes-Benz to brand its valet parking. “We were approached by Mercedes a little over a year ago. They wanted to offer a service for their customers to be able to have their car serviced while they were traveling,” said Sumrall.

If a passenger is a Mercedes owner, they can schedule in advance for the dealership to come and pick their car up from valet parking while they’re away traveling and have it serviced, said Sumrall. “The car is returned before the owner returns from their travels.”

All valet customers receive a complimentary newspaper and a bottle of water, said Sumrall. “We also offer a car washing service for an additional cost.”

Mercedes added some signage at the valet level, said Sumrall. “They also sponsored and branded our bottled water,” she said. “But valet is still handled by the airport.”

Houston sees valet parking as a way to elevate a particular customer’s experience within a diverse group of customers with varying expectation levels, said Begley. “Valet parking at an airport caters to a niche market just as economy meets the needs of other travelers,” he said.

Over the past three years, Pittsburgh has been working to improve customer service and increase airport amenities for all travelers from curb to gate,” said Walls. “So valet parking, along with taxis, Uber and Lyft and other pick-up and drop-off services, offers a convenient range of options for all types of traveler needs’ and budgets.”

Nashville International Airport has many different parking options at different price points, said Sumrall. “And it’s important to us that we don’t just offer one parking product,” she said. “Our valet customers really appreciate the ease and convenience of the service.”

In the end, airports considering adding valet parking need to understand that it’s a customer service first, said Linehart. “A lot of your customers say they really want this service, but some are price sensitive and will always go to the airport’s cheapest option,” he warned. “So if you move forward, make sure to invest in it and know that it may take up to two years to break even. Also know it will never be a big money maker. Look at it as more of a customer service.”