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10 Intertraffic 2020 12 Dynamic Pricing 32 Guest Contribution www.europeanparking.eu publication of the European Parking Association | Volume 36 | no. 1-2020 10 Intertraffic 2020 The industry meets in Amsterdam 12 Dynamic Pricing Learnings and challenges 32 Guest contribution Key trends in parking today Austria | Belgium | Cyprus | Finland | France | Germany | Ireland | Italy | Luxembourg | Portugal | Slovak Republik | Slovenia | Spain | The Netherlands: 8.50 Euro Croatia 63.75 Kuna, Great Britain 7.50 Pound Sterling, Hungary 2,550 Forint, Norway 74.50 NOK, Poland 39.10 Zloty, Sweden 80 SEK, Switzerland 15.75 CHF Photo: Shutterstock Photo: Dynamic Pricing leads to fluctuating parking prices. Representatives of the parking industry attach importance to a clear communica- tion of the principle to customers. Survey among experts Learnings and challenges – first steps towards a flexible pricing policy Dynamic Pricing and Revenue Management are key terms that have been heard more progressively across parking management across the world for some years now. The principle of a flexible approach to parking prices should offer advantages for operators and customers alike. So what is the current status of Dynamic Pricing? he basis of parking space management possibilities of computer-aided analysis of tors such as changes in demand, capacity or is the principle of allocating parking car park occupancy and possible pricing availability. This leads to high prices when Tspaces for a certain time and at a cer- models offer new perspectives for opera- the demand is high and low prices when the tain price. If there is no fundamental price tors and customers in both models alike. A demand is weak. increase or decrease for parking spaces, the further distinction is made between dy- Dr. Friesen’s company QUINTA Con- customer can assume the same price per time namic pricing for online bookings and for sulting is a Frankfurt-based consulting unit at day and night and in all seasons. In roll-up systems. company specialized in commercial opti- this classic management model, the customer mization, which has already supported as well as the operator can calculate the cost Price adjustment depending more than 25 clients in Europe and the US framework. The latter is only dependent on a on capacity utilization to implement Dynamic Pricing in parking. good location of its car park within the re- To get an idea of the similarities and differ- According to their own statements, the spective city to have a constant number of ences between the two concepts Dynamic company has worked together with opera- customers. Pricing and Revenue Management, one tors, investors, insurance companies, air- In many industries, conditions have should first look at the definitions. Revenue ports and fairs, who have achieved an aver- been comparably simple up to now. But Management according to Sheryl E. Kimes age revenue uplift of approximately 10 – 15 sectors such as the hotel industry or airline is a “process of allocating the right type of per cent per year by implementing innova- carriers have long since taken leave of such capacity to the right kind of customer at the tive pricing schemes like Dynamic Pricing. static and well-ordered conditions. How- right price so as to maximize revenue or ever, parking management in Europe now yield.” Understanding the customers is slowly following on the path. While op- What does this mean in a practical way? Industry experts and consultants are cur- erators can make their prices more flexible “Following this definition, Revenue Man- rently still observing a clear caution against and adjust occupancy peaks or troughs, agement can be seen as a quantitative strat- the model in many places with regard to the from the customer’s perspective, more use egy aimed to assign existing capacities to the operator side, although there are perspec- can be made of off-peak times. A distinc- demand in order to maximize revenue, un- tives for revenue growth. “There is little ex- tion must be made between new manage- der simultaneous price and capacity con- perience with Dynamic Pricing in parking. ment models in which a special price is set straints”, says Dr. Mark Friesen, Manage- Even though all private parking opera- on certain days of the week or at certain ment Consultant at QUINTA Consulting. tors want to maximize revenues, none dares times and those payment models, in which Dynamic Pricing is on the other hand a to be the first to introduce Dynamic Pricing each driver who is entering the car park fundamental method to change a price dy- on a large scale”, says Friesen. Outside of has to pay a separate rate. The increasing namically over time. This depends on fac- Europe there are already successful exam- 12 Parking trend international no. 1-2020 LEAD STORY << ples, such as SFpark, San Francisco’s man- ant Dr. Mark Friesen the presence of trained other areas has already become a natural agement system for on- and off-street park- staff in local authorities or private operators part of the purchasing process for end con- ing. According to Friesen, a crucial precon- is another particularly important aspect. In sumers, will be able to play an important dition of Dynamic Pricing is the use of many cases this is still an obstacle. Likewise, role in the parking context in the future. It is transactional parking data: “Only few park- effective internal and external communica- hoped that a price controlled by supply and ing operators make use of transactional tion is a key to success on a larger scale. demand will enable the company to offer parking data to understand drivers.” Nimesh more favourable prices at lower capacity Inamdar, International Chief Analytics/Da- First practical applications utilisation rates and thus to be more cus- ta Officer of Indigo Group S.A.S., confirms Despite such obstacles, Dynamic Pricing is tomer and demand-oriented. But such test- how important this is: “You really need to becoming a topic, which is being talked based approaches to the subject are still far understand the behaviour patterns of cus- about in the European parking industry. A from being common among all car park tomers at each specific location.” His experi- first starting point for this was the online operators in Europe. At the Interparking ence shows that each sector (airports, rail, reservation of parking spaces several years Group and the German subsidiary Conti- on-street, hospitals, retail and others) within ago. In this context, Dynamic Pricing was park, respectively, we were told that they parking industry varies when it comes to implemented at London Gatwick Airport as have no experience with Dynamic Pricing Revenue Management and how Dynamic early as 2010. This now also applies to many so far. Pricing is applied. The data for the drivers other locations worldwide. and subsequent analysis required for each But now more and more projects are also Pilot projects in Germany location can vary greatly and thus the analy- being implemented in Dynamic Pricing, APCOA Parking has started a pilot project sis and modelling requires state of the art where the prices are displayed on a roll-up. in Dynamic Pricing in Germany in the tools and knowledge before pricing can even This can be seen in first applications among summer of 2019, starting with car parks in begin. individual parking space operators. For ex- Hamburg, Stuttgart and Dresden. Later, the The experienced Revenue Management ample, Q-Park Operations Germany GmbH system, which was developed in coopera- team at Indigo began using Revenue Man- launched its first pilot project in Dynamic tion with Scheidt & Bachmann, was also agement methods, analysis and automated Pricing in December 2019 in the parking implemented in car parks in Frankfurt, Dynamic Pricing in parking over 20 years facility “EBV Carré” in Aachen. Further Leipzig, Berlin, Düsseldorf and Cologne. ago. From an Indigo perspective, to imple- parking facilities are to be converted to Dy- Entrances and exits are recorded automati- ment Dynamic Pricing at any location the namic Pricing operation in the course of cally so that the system always knows how foundation of business intelligence and ad- 2020 on a trial basis. The operator told our many free parking spaces are currently vanced data sciences are essential. Imple- magazine, they are currently unable to make available. mentation is one step, for Dynamic Pricing any well-founded statements with regard to “Our experience shows that the demand- to be a success many more factors needs to the development of sales by introducing oriented system has an enormously positive built-in all with the customer being at the Dynamic Pricing. However, the company is effect on the local properties. It also allows centre. According to Management Consult- confident that Dynamic Pricing, which in us to draw valuable conclusions and develop dedicated parking space concepts based on them,” says Detlef Wilmer, Managing Direc- tor of APCOA PARKING Germany. AP- COA has already received much positive feedback on Dynamic Pricing during the test phase. “The digital development and design of our parking garages pay off both in terms of the development of our service portfolio and the needs of our customers. In addition, the new tariff model allows us to act even more customer- and demand-ori- ented. APCOA’s greatest experience in in- troducing Dynamic Pricing is the enormous importance of transparency and analysis”, adds Anja Müller, Operations Director of APCOA PARKING Germany. Regulatory restrictions in the UK Photo: Q-Park Photo: Q-Park is currently testing Dynamic Pricing within the framework of pilot projects. The National European associations sometimes display at the access road shows the driver the current price. speak of further hurdles that exist in the ar- > Parking trend international no. 1-2020 13 >> LEAD STORY > ea of Dynamic Pricing.
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