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.
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.
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.
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.
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:
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.
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.