Hotel Online News for the Hospitality Executive June 12, 2008 – Niche Advisors recently released a study on “Top 30 U.S. Airports” that identified the various revenue sources for airports and grouped them into 3 revenue categories: (1) airline, (2) parking, and (3) concessions and other. Furthermore, six airports were closely analyzed and the findings indicated that only 50% of revenues were related to the core business in the form of airline landing fees, terminal building rent, and ground facility leases. The following is a summary of these airports’ revenue sources:
AIRPORT REVENUE MIX ($)
Airport Name Gross Revenue Airline Parking Concessions & Other Dallas/Ft. Worth International $567,612,000 $249,580,000 $106,911,000 $211,121,000 *Denver International $388,471,000 $217,393,000 $86,715,000 $84,363,000 Detroit Metro $266,513,000 $96,098,000 $58,859,000 $111,556,000 San Francisco International $503,914,000 $296,368,000 $67,428,000 $140,118,000 **Fort Lauderdale Hollywood $160,126,000 $81,693,000 $40,565,000 $37,868,000 San Diego International $125,366,000 $56,699,000 $28,392,000 $40,275,000 TOTAL $2,012,002,000 $997,831,000 $388,870,000 $625,301,000
AIRPORT REVENUE MIX (%)
Airport Name Gross Revenue Airline Parking Concessions & Other Dallas/Ft. Worth International 100% 44% 19% 37% *Denver International 100% 56% 22% 22% Detroit Metro 100% 36% 22% 42% San Francisco International 100% 59% 13% 28% **Fort Lauderdale Hollywood 100% 51% 25% 24% San Diego International 100% 45% 23% 32% TOTAL . 50% 19% 31% Source: DFW/DEN/DET/SFO/FLL/SAN (Notes: * DEN revenue data from 2007 Q1, Q2, & Q3 only, **FLL revenue figure from 2006)
Study Recap: “Airport Parking Market: An Untapped Revenue Source for Airport Hotels”
Our study challenged hoteliers to determine the feasibility of migrating to a pay for parking operation in their local airport markets through a series of self-assessment questions. In instances where local market conditions were opportune and favorable, we recommended hoteliers to seize these “low hanging fruit” to market and sell excess parking inventory at their hotels. To read the article in full, please go to http://www.hotelnewsresource.com/article32325.html.
Overview: Park and Fly Packages
Currently, many airport properties offer a “park and fly” package, which enables hotels to offer travelers discounted parking typically for 5 to 7 days or even longer. For the most part, this type of service offering is a win-win proposition for both parties. The hotel benefits from increased occupancy and revenue. The traveler receives a discounted parking rate in a safe hotel parking facility. Traditionally, however, hotels were still faced with the challenge of marketing and selling these packages at their own expense.
Case Study: ParkSleepFly.com
Since our publication, we learned of a company called ParkSleepFly.com that is taking the “park and fly” concept to a new level. ParkSleepFly.com offers customers the ability to book online lodging and parking accommodations at over 800 airport hotels in 129 cities across United States, Canada, and Mexico. They bundle a one-night hotel stay, either on the front or back end of the trip, with parking. Due to increased airport security and travel regulations, this type of service has become extremely popular with travelers who may have early morning flights and do not want the hassle of the morning traffic congestion, travelers who do not want to risk missing their early morning flights, or travelers who are returning on a late flight and do not wish to drive until the following morning. Regardless of the traveler’s reason, this organization offers valuable marketing and distribution channel for hotels to leverage since there is no cost to become a participating member hotel.
Since the company’s inception in 2003, ParkSleepFly.com is credited for generating 350,000 room nights at an average daily rate of $100.00 for its member hotels. According to company officials, they booked 76,000 additional room nights in 2007. The following are results that ParkSleepFly.com yielded at couple of their participating properties:
Case Study: Property A
A 362-room, full service hotel at Chicago O’Hare Airport increased its annual occupancy by 2 occupancy points and generated $300,000 in additional revenue with an ADR of $129.00.
Case Study: Property B
A 140-room, limited service hotel at Detroit Airport increased its annual occupancy by 9 occupancy points and generated $375,000 in additional revenue with an ADR of $80.00.
Conclusion
Many airport hotels have already incorporated this type of service to diversify their distribution channel to facilitate the sale of excess room and parking inventory. Due to our industry’s challenge of our products not having a shelf life beyond the current day, hoteliers are embracing different means to maximize yields. If you would like to learn more about how your property can become a ParkSleepFly.com member hotel, please contact:
Sang Hwang, Managing Director Niche Advisors Phone: (617) 448-0040 Email: [email protected] Website: www.nicheadvisors.com
Sang Hwang is the Managing Director of Niche Advisors, a consulting firm dedicated to providing customized solutions in specialty areas of the hospitality industry. The firm provides consulting, operations support, project management, and training services to enhance the value of hospitality assets. Niche’s parking consulting services include designing parking facility layout and flow for development planning, appraising asset value for acquisition or disposition strategies, implementing operational, contractual, and financial improvement initiatives of existing assets, conducting feasibility analysis for proposed development, repositioning operating strategies of under-performing assets, installing parking infrastructure for new hotel openings, improving revenue control processes and guest service levels, and managing procurement activities for parking access and revenue control systems (PARCS) and operator selection.
Airport Name Gross Revenue Airline Parking Concessions & Other Dallas/Ft. Worth International $567,612,000 $249,580,000 $106,911,000 $211,121,000 *Denver International $388,471,000 $217,393,000 $86,715,000 $84,363,000 Detroit Metro $266,513,000 $96,098,000 $58,859,000 $111,556,000 San Francisco International $503,914,000 $296,368,000 $67,428,000 $140,118,000 **Fort Lauderdale Hollywood $160,126,000 $81,693,000 $40,565,000 $37,868,000 San Diego International $125,366,000 $56,699,000 $28,392,000 $40,275,000 TOTAL $2,012,002,000 $997,831,000 $388,870,000 $625,301,000 Airport Name Gross Revenue Airline Parking Concessions & Other Dallas/Ft. Worth International 100% 44% 19% 37% *Denver International 100% 56% 22% 22% Detroit Metro 100% 36% 22% 42% San Francisco International 100% 59% 13% 28% **Fort Lauderdale Hollywood 100% 51% 25% 24% San Diego International 100% 45% 23% 32% TOTAL . 50% 19% 31%