Parking lots, even relatively small ones, can provide their owners with a lucrative source of steady income, but management is everything. Ensuring that all customers pay required fees to park is essential to parking lot profitability, especially in small lots around 30 stalls in size, but parking lot managers differ concerning the best approach to securing their revenue stream.
There’s currently a fierce debate concerning whether older methods such as honor boxes or new automated devices are best for revenue collection and lot policing.
Parking lots generate between $25 to $30 billion in revenue for their owners each year. According to the U.S. Census Bureau, there are more than 105 million revenue-generating parking spaces in the U.S., while parking industry experts estimate that there are between 100 million and 750 million commercial spaces nationwide.
Parking lots in big cities can generate significant profits from motorists desperate to find a convenient place to park in areas where spaces are hard to find. Even small lots can generate big profits for their owners if they’re in prime locations and are properly managed. Valet parking and honor boxes are long-standing parking lot management technologies, but the digital era has also introduced a number of innovative ways for facilities managers to run their parking lots.
High-Tech & Low Tech Options
- Honor boxes – This tried and true method of collecting payment from parking lot customers provides a low-cost way to manage parking lots. Honor boxes contain slots that allow customers to slip in cash to pay for parking privileges. Each slot on the box corresponds with a numbered parking space, allowing customers to find the right slot for their space.These simple devices are typically made of strong metal materials and equipped with a high-quality lock, making them largely impervious to theft. With an honor box, parking lot owners greatly reduce labor costs, as a permanent attendant typically is not necessary. Some staffing is necessary, however, to periodically inspect the lot to take up collections and ensure that all customers have paid for their space. Employees will call for towing services or a parking boot if they discover customers have improperly parked in a space.Honor boxes’ greatest advantage is their low cost. These devices require a relatively small initial investment to purchase the boxes and a stand for them. Unless parking lot owners opt to station a full-time attendant in the lot, labor costs are also low. The key disadvantage of honor boxes is that if they are not regularly monitored, some unscrupulous customers may park without paying.
- Multi-space meters – Multi-space parking meters are electronic devices that can help parking lot managers administer their lots by providing access control and payment acceptance services. In many cases, multi-space meters are located in the front of a lot and are equipped with an arm that raises a barrier to admit parking lot patrons.Patrons pay at the device before being granted admittance to the parking lot. Patrons may be issued a slip or ticket that they are required to display in their window to indicate that they have paid. Patrons may also be required to insert the slip into another device to exit the parking lot. Customers who have lost their tickets or slips may have to pay an additional fee to exit.
Multi-space meters offer their owners a variety of convenient advantages. Unlike honor boxes, which only accept cash, multi-space meters support payment by cash or debit or credit card. In an increasingly cashless society, this is an important benefit.
Labor costs are typically reduced, and the devices can be remotely monitored. Some models of the device can even send their owners alerts when the cash box needs to be emptied or when the device requires more paper for slips or tickets.
That said, multi-space meters also have a number of disadvantages. While labor costs are reduced, these devices can be expensive to repair. Payment processors will also charge a fee to parking lot managers for their services in facilitating payment by card. Costs for consumables such as printer paper will also cut into your profits. In addition, if they are malfunctioning, they will be unable to accept and process payments. Multi-space meters may also be confusing and frustrating for less tech-savvy customers to operate.
- Pay by cell phone – Some parking lots have even adopted a pay by cell phone model for operating parking lots. Using an app, customers can connect to a multi-space meter or similar device to facilitate payment. For busy customers on the go, this provides a great option. Some apps even allow parking lot patrons to use their devices to check lots for available spaces. This provides even more convenience for customers and can be an invaluable tool for small lots seeking to attract customers.Like any system, pay by cell phone has its drawbacks. Because information is being transmitted online, there is a chance that hackers might compromise the system and take money or customers’ personal information. Also, if the system goes down, it will create a great inconvenience for customers that may drive them to seek other parking space providers.
- Valet parking – Valet parking is a labor-intensive parking management practice, but it can generate higher revenues for parking facilities, as it allows them to maximize their use of available space. For small parking lots, this advantage can be a make-or-break deal.Valet parking allows lot management to increase the number of available spaces in the lot by use of a practice referred to as “stack parking.” In stack parking, valets are able to park cars two or more spaces deep, as they hold all keys and can move cars as needed to retrieve blocked-in vehicles. Stack parking reduces the need for maneuvering space for customers, thus increasing the number of spaces facilities managers can include in their lots. In addition to these benefits, customers like valet parking because it’s quick and convenient for them.
A valet parking operation requires some parking equipment, such as signs and valet podiums, as well as valet key cabinets to allow valets to keep customer keys carefully organized for quick retrieval. The big cost in running a valet parking lot is labor, as lot managers must keep an adequate staff of trained valets on hand to manage customer vehicles.
Insurance may also be an added cost because staff members are involved with operating customers’ vehicles. Before committing to a valet program, lot managers should carefully calculate the added labor and insurance costs and compare it to estimates of increased revenue from a greater number of spots and higher fees for valet service.
Making a Choice
In the end, whether using high-tech solutions or more traditional approaches to parking lot management ends up being the right call for you, it depends largely on your individual financial goals for your parking business and your management style. Evaluate your business carefully, and then select the product that best fits your parking lot’s size and the way you wish to manage the facility. No matter what option parking lot managers choose, finding a reliable partner to provide parking equipment is important.
ParkingZone provides top quality parking lot equipment and supplies, including honor box sets, plastic parking stops, valet gear, and much more. For parking lot operators and event organizers, ParkingZone is the one-stop shop online for the very best parking gear, including modern, high-tech solutions.
ParkingZone has been serving its customers for nearly 30 years and carries more than 1,700 items to meet your needs. Check out the company’s website for a full range of products or to set up a consultation to discover how ParkingZone can accommodate your unique parking equipment needs.
Check out the company’s website for a full range of products or to set up a consultation to discover how ParkingZone can accommodate your unique parking equipment needs.