The future of smart parking
Quick return on investment for a fast-growing market
Smart parking is seeing one of the fastest growths in the Internet of Things (IoT) and is widely used all over the world. Moreover, the return on investment (ROI) turns out to be much quicker than can be imagined.
The parking market in North America is estimated at 45 billion dollars. Within this market, the smart parking market accounted for 2.3 billion dollars in 2018 and should continue to progress up to 4.4 billion dollars by 2025.
Smart parking is defined as an automated vehicle parking system that assists drivers in finding a vacant place quickly. The objective is to reduce the time spent looking for parking, a space or even a floor. Thanks to sensors and cameras that detect the presence or absence of vehicles, indicator signs direct motorists to the available locations, saving considerable time, while improving the customer experience.
The inefficient use of parking spaces becomes a non-negligible cost factor and must be considered, because the operating costs may be particularly high for owners of parking lots located in large urban agglomerations.
- Normally, driving around a parking lot several times looking for a free place is frustrating for employees, visitors and customers. The absence of adequate parking management can even be costly for retailers when frustrated customers head for the exit to park – and do their shopping – elsewhere.
- Some lots are not as full as they could be and have the possibility of accommodating many more vehicles. Most lots are also deserted at night and may present additional revenue potential.
As the case may be, an ROI of less than 2 months renders the implementation of a smart parking system extremely profitable for parking lot owners and all the more beneficial for the users. Here are the main advantages.
Benefits for smart parking
Occupancy in real and historical time: owners and users can have a precise idea of the occupancy of the parking places in real time. This transparency based on the data allows sounder business decisions.
Real-time modulation of parking costs: owners can adjust the parking costs according to the data acquired in real time, according to the daily peak traffic to the period of the year.
Additional revenue sources for the owners: if the parking facility is not used at its full capacity, leasing of these vacant places to local residents, event spectators or people working nearby can generate new revenue sources.
Better customer experience: thanks to the light guidance system or a digital mobile booking app, employees, visitors and customers save precious time looking for a parking place, thus benefiting from a hassle-free experience. A pleasant experience can significantly strengthen the brand image of commercial entities or businesses with customers.
More efficient traffic control: the signalling technologies and light guidance systems direct traffic straight to the zones where places are available and allow reduction of polluting emissions.
Increased security: using the cameras’ analytical functions, security guards and employees have real-time data on parking and can help prevent suspicious activities and offences.
What about the return on investment?
The complexity of the Internet of Things transforms the profitability assessment into a judicious exercise. The wider the range of available technologies, the more complex the task of calculating the return on investment becomes. Each project must be assessed exhaustively to confirm its profitability.
To calculate the return on investment, let’s take a simple example for the conversion of a 600-place parking lot with the installation of sensors (1 sensor/parking space) and an indicator panel at the entrance. The return on investment can be defined as follows:
Assumptions – 5-year horizon:
- Occupancy of the parking is 80%, which means that up to 20% of the 600 places can be leased for a monthly amount fixed at $100/month per place, or 120 places x $100 x 12 months x 5 years = $720,000;
- Calculating an investment cost of $250/sensor (supplied and installed): $250 x 600 sensors = $150,000;
- Considering the recurring operating costs estimated at $0.25/sensor-month x 600 sensors x 12 months x 5 years = $9,000.
Conservatively, it is estimated instead that the increase in occupancy would be 10% instead of 20%. We thus obtain $159,000/$360,000 = 0.44, for a return on investment of less than 6 months. Given the above-mentioned advantages, the conversion to smart parking represents a sound investment for any company or government.
The key steps for converting parking to smart parking
- Analysis of the status quo: Analysis of the parking occupancy data based on the periods of the day/week. Analysis of the user segments and classification of potential revenue sources.
- Analysis of the technological options and operating strategies available: Identify the range of products to consider and develop foreseeable operating strategies.
- Proposal of smart parking concepts: review of the trends and products available on the ticketing and reservations market, access control, space monitoring, analytical tools and business intelligence.
- And all the usual engineering services: plans & specifications, management/construction and oversight of the work.
In today’s world, everything is becoming increasingly interconnected due to the Internet of Things, and this will revolutionize the economic models while leading companies and institutions to concentrate more on results, long-term strategy and optimization of commercial processes.
In this perspective, to mitigate the inefficient use of parking spaces, conversion to a connected, automated, start system, providing data in real time, presents a multitude of non-negligible advantages (security, fluidity, customer experience, GHG reduction and ROI<6 months) for which parking lot owners must position themselves quickly.
The future of smart parking: combining automation, robotics and autonomous vehicles
Robot valets can already park cars. The next step will be to have autonomous vehicles that park themselves. Cities and parking managers worldwide already understand the importance of upgrading parking to smart parking. Several other technological innovations will play a major role for this future generation of parking facilities. These innovations, in particular, are next-generation digital cameras, wireless communications (e.g. 5G), and big data analysis.