Case Study
City of Santa Monica – The Hidden Cost of Free Parking
Evaluating the Economic Impact of Free Parking Initiatives
Who’s Involved
Henry Servin | Parking Manager for the City of Santa Monica
Customer Takeaways
Free parking devalues the inventory. Parkers are more location-sensitive than price-sensitive. Paid parking helps to manage the supply and to maintain effective turnover for nearby businesses. When merchants say that there isn’t enough parking, that it’s always full, re-evaluate your rates to create turnover.
Henry Servin, Parking Manager for the City of Santa Monica
Summary
During the COVID-19 pandemic, municipalities and businesses across the country faced a 50-70% drop in commuter parking activity and visitation. During the 2020 holiday season, the City of Santa Monica tested a free parking initiative to boost economic activity amidst the significant pandemic decline in commuter parking and visitation. The city utilized ParkHub’s Smarking BI tool to analyze the effects of this program and guide future parking management decisions.
The Challenge
Stimulate local economic activity and increase downtown visitation.
Maintain parking revenue and the availability of parking spaces for residents and visitors.
Track data that would drive insight into the success of the initiative.
The Solution
Pilot Program for Free Parking
The city enabled free parking at parking structures 1 through 6 and maintained paid parking at structures 7 and 8 to see if parkers shifted to take advantage of the offer. The city kept its gates active, and each visitor had to pull a ticket for entry and return it upon exit. The program was active between December 10-25.
Data Tracking with ParkHub’s Smarking BI
ParkHub’s Smarking BI solution was used to track and analyze the program’s impact. To understand behavior and economic outcomes, we compared free and paid parking structures. A year-over-year (YoY) transaction analysis revealed the program’s results.
The Results
Free Parking Doesn’t Pay
The data revealed that the free parking did not significantly shift parkers from paid structures, indicating that location convenience outweighed cost considerations. The analysis showed only a slight change in overall visitation, with a marked YoY transaction loss during the peak holiday period.
Despite free parking at structures 1 through 6, the paid structures of 7 and 8 retained approximately 10% more transactions year over year. The city lost approximately $128,000 in revenue during the program.
There was an insignificant change in YoY loss in transactions from December 10-22. Between Dec 23-25, parking structures 1 to 6 suffered a YoY loss in transactions of 64.94%, while parking structures 7 and 8 observed a loss of 55.36%.
Compared to 2019, there was a 16% increase in the proportion of transactions for 90-minute parking (free regardless of the holiday parking program). The proportion of parkers who stayed from 90 minutes up to the daily maximum rate of 5.5 hours declined. There was a slight increase in transactions over 5 hours, likely due to an increase in construction workers from nearby projects.
In Conclusion
The initiative demonstrated that free parking did not drastically alter parkers’ behavior or significantly boost economic activity. ParkHub recommended that the city maintain its paid parking for revenue reasons and to optimally allocate parking resources for visitors and residents. The insights gained through ParkHub’s Smarking BI will guide future decisions on parking management and economic stimulation strategies.
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Experience How ParkHub Can Transform Your Parking Operations
“ParkHub was designed to revolutionize an antiquated industry by providing an agnostic and open technology platform for finding, reserving, and paying for event parking online. As we expanded, we developed a best-in-class, mobile-point-of-sale device and comprehensive management suite, currently used by hundreds of parking operators, sports & entertainment venues, universities, festivals, & more, at thousands of locations across the U.S. With our recent acquisition of Smarking, we also offer full-scale business intelligence, dynamic pricing, and pre-paid reservation products, utilized by numerous municipalities across the country.”
Chris Elliston
ParkHub Chief Revenue Officer