Hotel parking facilities can be highly efficient profit centers, but often are underutilized by hoteliers who lack revenue management discipline.

Michael Doyle, managing director and executive vice president of asset management company CHMWarnick, said well-operated parking lots and facilities can benefit both the guest experience and returns for ownership.

Selling parking spaces is similar to selling hotel rooms as both require the same level of revenue management discipline, he said. But if there is no revenue management discipline, then a hotel is missing out on opportunities to maximize the performance of its parking operation.

"They are perishable products. ... If they're underutilized, you'll never be able to recover any revenue from that space," he said.

The difference between a parking space and a hotel room is the latter is more traditionally sold for 24 hours at a time, but a parking space can be used for 15 minutes, an hour, three hours or longer. The demand for parking spaces declined during the pandemic. However, about five months ago, the use of parking spaces from leisure travelers has started to increase.

Ron Loman, senior vice president of operations at management company Real Hospitality Group, said some of his company's properties started charging overnight fees during the pandemic, bringing money to the bottom line.

"In our resort properties throughout Maryland and Delaware, we just implemented a nightly fee. It is going to be seasonal. It's not a large fee: $10," he said, noting there's been little resistance to it so far. "It's another revenue stream that's very profitable, because we don't have any costs associated with it."

Some smaller beach towns are strict on parking, he said, and if a hotel can supply that, it provides value to the guest. And for airport hotels, park-and-fly options have always been popular.

According to data from STR, CoStar's hospitality analytics firm, airport hotels and resorts provide the most parking spots, while hotels in rural locations have the least.

Real Hospitality is now testing an honor system model at one of its Detroit hotels where a third party will bill the guest after taking a photo of their license plate when they enter and leave the gated lot.

"I just want to see what the take rate is on it. I think we'll be surprised that more people will send in the money than we think," he said.

Through this model, it is a traditional revenue split of 70/30 — 70% going to the third party and 30% to the hotel.

William Rademacher, general manager of The Wayfinder Hotel in Newport, Rhode Island, said in an email interview his property recently held a media and guest event where they sectioned off the entire entrance to the hotel, which is normally used as a parking lot.

"We have a lot of parking space at the hotel, and we felt that by using this available space as an activation [space], we could create a different experience for our guests in an area that is usually very boring," he said.

The hotel transformed the parking lot with artificial turf, lawn games, a DJ and roller skaters serving drinks. The success of the event has motivated Rademacher to implement this business strategy for future events.

"We are looking at activating additional areas of the parking lot with clam bakes and vendor fairs this summer and beyond," he said. "We have a large vendor fair, with 50-plus vendors, happening in mid-July in the parking lot."

Loman said Real Hospitality has some hotels that have covered parking available, which presents an opportunity to be packaged and sold with a guestroom.

Other creative solutions include one of its Florida hotels partnering with companies that transport cars from the north to the south during the winter. The hotel charged the company about $150 for it to offload and park cars at its lot. On top of that, the hotel could market to the folks who would fly down to Florida, spend a day and pick up their cars.

Real Hospitality also partners with Amazon, allowing drivers to complete testing at one of its Milwaukee hotels that had unused parking lot space during the pandemic.

"We blocked off an area, we got a $500 fee, they did their truck testing and then [the hotel] had a small meeting room where they came in and did the written test," he said. "It worked out well for the hotel. ... We were able to refer that business to other hotels where it fit that demographic and had a large parking lot."

Lastly, Loman said another opportunity comes through tenting the parking lot and using it for corporate and social meetings.

At the Wayfinder Hotel, Rademacher said guests are not charged for any of the parking lot events, but it is included in their stay as a value-add.

The hotel is also including these parking lot activations as part of its corporate business program.

"We are finding that these exterior activations perfectly align with corporate groups who are looking to travel outside of cities with more open-air activities and events," he said.

The Wayfinder Hotel runs several road warrior packages in the off season and advertises free parking, which is hard to come by in Newport.

"We don't charge people for parking. However, we do market the free parking and available spaces, which in turn does drive revenue," he added. "Having free parking and more spaces is a huge plus for us compared to the downtown hotels where parking is limited and very expensive."

Doyle said the goal is to get to the optimal, maximum price as quickly as possible while remaining competitive. But there are a few factors to keep in mind.

Depending on seasonality and events in the local area, rates will move up and down.

"It may not be dramatic, but rates will adjust. Often it's more you may be discounting less in peak season rather than what you might offer during off season," he said.

From CHMWarnick's view, if hotels aren't getting any push back from guests on pricing, then the prices are too low.

"You do need a little friction at a certain level," Doyle said. "You have to find a balance in terms of what is the market and what is my hotel room product priced at. ... Someone's not going to pay you $75 to park their car if they're going to pay $100 for their room."

CHMWarnick also balances selling to monthly partners to leverage the mid-day period when parking spaces typically remain empty. Hotels with parking lots near hospitals could also benefit from partnerships.

Often there are office buildings where the parking spaces have reached capacity, leading to overflow opportunities for nearby hotel lots, he said.

Engaging parking operators for local market knowledge is helpful to keep an eye on competitors, such as non-hotel affiliated parking lots, he added.

Doyle said CHMWarnick will optimize online parking reservations platforms, which allows consumers to book guaranteed parking in advance.