IT SOUNDS TOO GOOD to be true: A new app offering valet parking in Boston for less than what it costs to park in most garages.
A San Francisco-based technology company called Luxe Valet charges $5 an hour for valet service and parking with a maximum charge of $25 for all day in Boston. Like Uber, the service relies on a tracking app that customers download on their phones or tablets. As drivers leave for a destination, they can request a valet to meet them when they arrive and, as long as the app is open, Luxe tracks the car until it is near the destination and then dispatches one of its blue-jacketed valets, who get there by foot, skateboard, or scooter. The app will give the driver the name and picture of the valet and then can track where the valet takes the vehicle.
Customers can either arrange for a time for the car to be returned or request it later, with about a 15-minute wait. The parking spaces, though, may not be in close proximity. For instance, I had a valet meet me outside the CommonWealth office on Beacon Street but he took the vehicle to a garage at 131 Dartmouth St., next to the Back Bay train station. If I hadn’t requested a specific return, it would have been a half-hour-or-longer wait if I made an on-demand request at 5 p.m.
“Luxe is doing well in Boston because it solves for a very common problem that people in all cities experience — the pain point of parking and maintaining your car,” Lauren Beshears, general manager for Luxe Boston, wrote in an email. “This is especially valuable for the large population who live in the surrounding suburbs and frequently come into Boston for work, culture, dinner, and shopping.”
But Michael Miele, who with fellow Tufts graduate Karan Singhal developed a similar app focused more on businesses, said it’s difficult to see how the Luxe model can be sustainable. Miele said his company has partnered with some garage owners in Boston who rejected deals with Luxe because they saw it as a competitor operating its business out of their lots.
“We’re a software platform for parking operators and garages,” said Miele. “Every parking company I’ve met with, they don’t understand how their [Luxe’s] model is going to be sustainable. The $5 price is lower than to cover all the costs.”
Indeed, the Luxe service, though currently limited to downtown Boston, the North End, Beacon Hill, Back Bay, the Financial District, and part of the Seaport, is a bargain in a city where a day of parking can cost $40 or more for three hours. The company does engage in surge pricing for peak hours and special events such as basketball and hockey games. The service currently ends at Massachusetts Avenue so Red Sox fans would be out of luck.
The company has been paying valets as independent contractors but is moving to making them employees, with benefits such as health insurance and overtime for full-time workers. The company will begin assessing a $1 “valet care fee” that will be charged per transaction to defray the cost.
An ad on Monster.com for Luxe valets in Boston says they can earn up to $15-$20 per hour, plus commission, and retain all tips. But one former Luxe valet says those numbers are a bit misleading. He said he was paid $10 per hour and could earn additional bonuses if he parked multiple cars in an hour.
For my entire day of parking, it cost $25 plus a $4 tip that was split between the morning and evening valets who drove my car. But it tied up the young man in the morning for about 25 minutes while he picked up and parked my car and 40 minutes for the valet in the evening. That means that my whole day of parking barely covered the time the two valets had to be paid as well as whatever the company’s cost was in its deal for the space. And if there were no other customers waiting in the immediate vicinity, it’s hard to see how that becomes an efficient way to make a profit.
Luxe makes deals with garage and lot owners to lease spaces at a reduced monthly rate and then counts on using those spaces multiple times in the course of the day to make money. The key, says Beshears, is making deals with garage owners outside of the high-priced zones such as the Financial District and Post Office Square.
“Our business is built off the divergence of supply and demand by leveraging the real estate supply on the outskirts of cities to meet the increasing demand for parking inside dense urban areas,” Beshears wrote. “Our parking partners see the great opportunity to work with us as they understand the growing trend in on-demand services and the value of our logistics that help to drive traffic to them, especially to underutilized spots and during the time that they need.”
Beshears declined to say which parking garages the company has agreements with in the city. “Our arrangements with parking lots and operators is company-sensitive information we do not share,” she wrote.
Officials at LAZ Parking, the national parking management company that runs a number of garages in Boston as well as managing most of the MBTA lots, have met with Luxe representatives. A LAZ spokeswoman said nothing has been done and those talks still continue.
The former valet said he parked cars in Government Center Garage on New Sudbury Street; two garages in the Back Bay, the Dartmouth Street facility and at the Copley Marriott; a surface lot in Chinatown the company no longer uses; and at least two others, though he could not recall their exact locations.
The model appears to work for investors, who include some heavy hitters such as Google; Lightspeed Ventures, a $3 billion capital management company in northern California; and Venrock, which counts Apple among its early venture investment projects.
In addition to undercutting garage prices and draining some of their revenues, Luxe could also potentially impact the established valet service in Boston. Like taxis, valet parking is strictly regulated by the city, with requirements for where and when they can operate as well as paying fees to the city. A spokeswoman for Mayor Marty Walsh said the regulations currently would not apply to Luxe.
“The City of Boston is watching these new technologies to see if regulations need to be reviewed with the goal of ensuring that services do not negatively impact the safety and security of Boston residents,” Gabrielle Farrell wrote in an email.
Beshears said Luxe has not inquired about how the regulations affect the company because there is no need.
“Our business model is not that of a traditional valet parking company; we are a logistics and services platform that helps provide a seamless urban lifestyle,” she wrote. “There are many people who may want to leave their cars at other locations throughout the city that don’t currently have traditional valets and we’re able to provide another option in those locations.”