Next-Generation Valet Services

The Luxe app allows users to drop a pin on a map to indicate their destination. Upon arrival, a Luxe valet appears (by scooter or skateboard or running shoes) and takes their car to a parking garage. Then the valet returns the car within 10 minutes of the user requesting it back.

 

 

The Luxe app allows users to drop a pin on a map to indicate where they are heading within a serviced area of the growing number of cities served.  Upon arrival, a Luxe valet appears (by scooter or skateboard or running shoes) and takes their car to a parking garage.  Then the valet returns the car within 10 minutes of the user requesting it back.  In SF, Luxe parking costs $5 an hour, with a $15 maximum daily rate.

Luxe pays its valets an hourly wage and pays fixed monthly prices for the parking spaces it leases.  It says it can turn a profit with high enough volume.  It carries full insurance coverage of car and driver.

 

Current Status

Luxe raised $20 million in VC funding in March 2015 to expand into new markets. It now operates in San Francisco and Los Angeles, and announced plans to expand to Chicago, Seattle and Boston by the end of April. The app is now available on both Android and iOS.

Luxe and its competitors, Zirx and Vatler, operate in core areas of San Francisco, LA, DC, Seattle.  ValetAnywhere operates in New York City.  Vatler specialize in restaurants and special events.

 

5-20 Year Evolution

Valet services started in autumn 2014 in SF, already expanding into LA, Chicago, Seattle, DC, Boston, New York. As it has with many tech based mobility solutions, VC money is coming their way, and they see little or no limit to their expansion potential.

A question of interest to Fehr & Peers clients will be whether there is a logical ceiling to how much additional parking capacity such services can generate. Parking supply may be a constraint on both the valet services’ cost and pricing model and their expansion potential.  A fee of $15 is half the amount some San Francisco parking lots charge, suggesting that many of the city’s lots may just be unwilling to work with the company. Luxe says that their pricing is sustainable, and that they are balancing supply with demand by rolling out the service slowly until it can get enough parking lots and valets to meet expected demand.

 

Relationship to Other Tech

It’s a classic app based mobility service connecting travel needs with a low paid army of contract service providers. An alternative to Uber and Lyft and, for some, car sharing, it may move us a step closer to a tech assisted social heirarchy of allocating scarce transportation resources to the public: Luxe as the first class ground transportation service, Uber or Chariot as business class, and public transit as coach class.

 

Possible Benefits

Benefits to travel supply/demand management: Company leaders argue that they make parking supply more efficient because demand for spots is uneven and they smooth out demand.

Benefits to user: In addition to low-stress parking, users can take advantage of car wash, fuel fill-up, and offer that valet will do your errands while they have your car.

Societal dis-benefits:  Removes a disincentive to driving for some. Not likely to reduce driving in the central cities, more likely to increase it and to market-price it, raising equity concerns, especially if some of the spaces they lease are in public garages. Remains to be seen whether it is most heavily used for intra-city travel or whether it will focus on the suburban-to-urban travel where transit is a less viable option.