MAXIMIZE PROFIT WITH YOUR HOTEL PARKING

                                                   
Parking revenue is regularly disregarded and is often one of the biggest sources of unrealized income in hotels. While every property and location is unique, hotel owners and asset managers must encourage operators to identify this revenue opportunity.


In all major cities in Nigeria, parking problems are reaching breaking point and city authorities are now considering some drastic changes. Governmental studies are looking at the prospect of introducing the on-street maximum parking time to 1 hour in some of the busiest areas in order to avoid double-parking and to make parking spaces available for the maximum number of drivers. A lot of the offices, hospitals, malls and hotels used to offer free surface/underground parking to visitors but they are slowly introducing paid parking via the use of VAP Cards Technology, PARCS and Parking Meters by engaging parking operators, much to the satisfaction of staff, residents, guests and dissatisfaction of un-wanted visitors tagged “free-parkers”. 

Parking is often not a consideration for hotel operators; however, asset managers and owners should encourage them to capitalize on this unrealized income. With the recent construction regulations, city hotels, airport hotels and resorts have the potential to generate additional revenue with their large parking space.

In Lagos, Port-Harcourt and Abuja, big hotels such as Eko Hotels, Federal Palace Hotels, Sheraton, etc, have all introduced paid parking for the use of their parking spaces with the utmost objective of restricting unwanted visitors tagged that do not patronise the hotel for business. This according to an insider helps boost revenue for the hotels and also aid facility security.

If a parking spot is not occupied or is provided free of charge, it represents a loss of revenue. Sounds familiar? Yes, parking space should be treated in a similar way to a guestroom or an airline seat. Do hotels like to give free guestrooms away? How often do drivers self-park or even use valet parking, without even walking into the hotel? 

Some hotels may be reluctant to change due to brand standards or the fact that the competition doesn’t charge for parking, but they should approach the issue differently: the most meaningful way to beat the competition is to make your business the absolute best it can be. So operators must provide a well-trained/professional valet service at the entrance – ‘first impressions count’. When a hotel has a professional parking system in place, the customer experience is automatically enhanced, even though they have to pay a small fee for parking. When there are changes, even the best-run business will lose some customers to the competition, but these losses are rarely as many as feared. Further, these losses are usually those guests whose expectations are simply too high or they are “low cost” customers. Providing an enhanced service like professional parking service will also help maintain a high perceived value of the product.

Even if the operator decides not to charge hotel guests for parking; additional capacity can still generate revenue. The hotel owner or the asset manager should encourage the operator to speak with businesses and residences around the hotel in order to identify their potential needs and initiate a rental scheme for them. Similar to corporate room rates, incentive tariff proposals can be created to maximize revenue.

Parking at the airport is always expensive and often frustrating. For example, parking tariff at MMA2 in Lagos is currently ($1.2) N200 per hour but if the hotel provides shuttle services to the airport, the operator can offer ‘Park & Fly’ services to non residents at a cheaper rate. The hotel can offer similar options during major conventions, concerts and other events. 


The opinions of local residents are a factor that cannot be ignored. The hotel will have to deal with reluctant customers who will complain about the new parking policies. Like any other changes, the operation needs to be prepared to respond appropriately. The key to the success of a smooth transition is appointing experienced and knowledgeable operator to manage hotel paid parking, set clear policies, implements staff training and presenting the new system in a way which highlights its benefits. At the early stage of this transition, for instances you can offer to validate their ticket for free parking when the customer pays his/her bill. Again, staff training and clear policies are required.
Pricing is a critical factor and will ultimately end up being the most important determinant in profitability. Hotel parking is generally considerably under-priced, but price alone is rarely/never the single most important deciding factor in choosing a hotel. Hotel owners should invest in parking technology. There are currently few specialized companies in the Nigerian market which provide suitable options for both self-parking/mobile parking and valet parking. An independent professional or consultant for the hotel should ensure that the management company (i.e. the operator) appointed is experienced and has the local knowledge of the area in choosing the most appropriate system for the property. 


If the operator wants to take this income stream seriously, they have to appoint a reliable parking manager. The potential income revenue is so great that they cannot give the responsibility to the room or security department. The manager must have a specific job description and the right training.

The operator should create Standard Operational Procedures (SOPs) and train their employees to manage the parking. Failure to capture revenue is often the result of non-compliance with systems in place designed to track and collect fees. The operator has to protect this revenue like in an F&B outlet, with a cashier for instance. The operator can install an incentive program for the valets to make sure that the fees are paid. Training all the hotel staff is important as they must understand the parking policies to give a consistent message to customers. Regular monitoring of results should also be undertaken.

In-conclusion, here are a few suggestions: 

• Engage the working of a parking consultant for surveys and drawing up a cost-benefit analysis projections fully discussed and agreed prior to introducing paid parking.

• Seek stakeholders and customers opinion prior to paid parking implementation.

• Engage only the use of a professional and recognized local parking company as your operator.
• Be sure to know what your real parking costs are prior to start.

• Be sure to factor in continuous staff training, depreciation and, maybe marketing.
• Analyse your parking revenue per square foot per annum.

I strongly believe that there is nothing morally wrong with making a profit with your parking facility. You might not realize it but a goldmine may be sitting in your backyard. 

Author: Mr. W.A Seriki is the Managing Director (V-Park Management Solution Limited) and he is also a Parking Consultant based in Nigeria. The company V-Park provides expertise and professional services in total parking management solutions which also covers the hospitality industry. For more information please contact info@v-parkms.com or visit http://www.v-parkms.com. 

Credit: African News Online

10/01/2012