Most property owners hope to balance multiple priorities when looking for a parking management provider, including:
Balancing these priorities gets a bit more complicated when you add the various technologies, management agreement types, and long-term strategies that owners need to consider. While some parking management arrangements meet some of these needs, they often address only one or two.
We think that revenue-share parking agreements strike the right balance for each priority. In this article we’ll assess the benefits of a revenue-share model for property owners, including how these arrangements are structured to maximize incentives for both owners and operators.
Before covering the benefits, it’s helpful to understand how revenue-share parking agreements are structured. The details of specific parking management contracts will vary, but revenue-sharing agreements generally include the following aspects:
Parking leases and parking management agreements can bear similarities to revenue-share arrangements. The primary difference is in how operators are financially incentivized. In a revenue-share agreement, the operator makes more money by growing total parking revenue and not by improving their margins through cost-cutting or inflating pass-through expenses. We compare more options in our comprehensive article on parking management deal structures.
This key incentive difference is crucial for understanding the benefits of a revenue-share parking agreement, which are outlined in the following sections.
Just like a lease or standard parking management arrangement, revenue-share agreements still transfer management responsibilities and costs to the operator. This means property owners can relinquish services like routine facility maintenance and upkeep, enforcement, monitoring, and payment management.
Because management companies cover operating costs from their portion of the revenue share, they are motivated to go beyond merely handling routine tasks needed to run a facility. Operators are incentivized to reduce overhead by integrating technology solutions, like contactless payment or license-plate-recognition cameras, that eliminate or automate manual work. This tech-enabled management approach can scale and improve service without adding on-the-ground staff. In a management-fee model, operators may not have aligned incentives and may wish to pass through as many marked up costs as possible.
Certain parking management agreements don’t incentivize operators to openly share data on financial performance and operating costs. Without a clear picture of current performance, it’s difficult for owners to understand their assets’ revenue potential or how much their management provider actually earns.
In a revenue-sharing agreement, the asset owner and operator share clear performance insights that should at least include:
This comprehensive and up-to-date view empowers operators and owners to understand what’s happening at their facilities, when, and the impact to revenue.
Revenue sharing doesn’t work with a “set it and forget it” approach. Instead, the operator is incentivized to implement, test, and optimize dynamic pricing to capture unmet demand while monitoring driver price sensitivity.
The shared upside also provides a compelling reason to explore creative ways of maximizing occupancy, like advertising, promotions, and renting out space for food trucks, pop-up events, and even film shoots. Rather than accept current demand levels, AirGarage used target advertising tactics (online and offline) to help triple annual parking revenue at a residential building in Boston, MA.
Your parking facility is a vital part of a customer’s journey - every trip begins and ends with parking! In a revenue-sharing agreement, your parking management provider is invested in delivering a safe and reliable experience with easy-to-use reservation and payment options that attract drivers. The operator isn’t incentivized to line their pockets at the customer’s expense by sacrificing key parts of the driver experience like cleanliness, proper lighting and safety precautions, or convenience.
Customers notice options like license plate-reading cameras that automate payment upon facility entry and exit. And a positive experience leads to repeat business, stronger reviews, and a reputation as the preferred parking choice. As an example, AirGarage assumed management of a parking facility in Charleston, SC, and only 6 months later boosted driver ratings from 3.7 to 4.7 stars by adding modern payment options and improving traffic flow.
Property owners opt for revenue-sharing agreements to ensure reliable income with upside potential. But if revenue drops, they aren’t stuck paying a fixed management fee for an underperforming parking facility.
For operators, the revenue-sharing approach offers a path to sustainable growth through long-term partnerships. At AirGarage, we prefer revenue-sharing agreements because they demonstrate confidence in our management capabilities and ability to increase revenue. That’s why we’ve invested in a vertically-integrated approach that applies best-in-class technology to optimize parking pricing, enhance security and enforcement, and more effectively manage properties.
